Palladium at year high, driving precious metals

London (Aug 10)  Palladium touched a one-year high, leading gains in precious metals, as stronger Chinese car sales added to concerns over insufficient supply of the commodity used to reduce pollution from vehicles.

Gold rose as traders cut bets on higher US interest rates, hurting the dollar.

Palladium for immediate delivery soared as much as 7.7% to $747.10 an ounce, the highest level since June 2015, and was at $736.75 by 11:32, according to Bloomberg generic pricing. Platinum climbed 2.4% after reaching its highest since April 2015 and gold rose up to 1.1%.

Palladium is up 19% in the past month, the best performing commodity. Chinese vehicle sales in July gained the most in 17 months, data showed this week. A weaker dollar since late July has also spurred precious metals.

That “highlighted a generally supportive backdrop to palladium demand, exacerbated by ongoing concerns that output from top producers Russia and South Africa may be under threat,” said Jonathan Butler, a precious metals strategist at Mitsubishi in London. “We could see a bit of profit taking from here, but the $700 level seems to have been recaptured convincingly.”

The dollar has dropped as traders cut bets that the Federal Reserve will raise interest rates this year. The Fed has so far refrained from raising borrowing costs after hiking them in December. Lower rates favor precious metals, which don’t pay interest, over investments like stocks and bonds.

In ETFs and other metals:

Holdings in gold-backed exchange-traded funds fell a second day to 2 035.1 metric tons on Tuesday, data compiled by Bloomberg show. Spot silver climbed 2.5% to $20.3445 an ounce and gold advanced 0.2%. Share prices of Anglo American Platinum [JSE:AMS] and Impala Platinum [JSE:IMP] both rose more than 3% in Johannesburg trading.

Source: fin24