Platinum's Premium to Palladium at 13-Year Low on Diesel Concern
London (Oct 1) Platinum’s premium over palladium is at the lowest in 13 years on concern that the Volkswagen AG emissions scandal will turn car buyers toward gasoline vehicles.
Platinum, mainly used in devices that curb harmful gases from cars and particularly in diesel types, costs about $248 an ounce more than palladium, the least since 2002. Platinum prices have slumped 7.5 percent since Sept. 19, when the German carmaker admitted attempts to rig U.S. pollution tests for diesel models. Palladium, used mostly in gasoline vehicles, has gained 8.8 percent in the period.
“The reaction in the financial markets is clear that diesel cars will be less in demand in future and gasoline cars will be more in demand,” Georgette Boele, a strategist at ABN Amro Bank NV in Amsterdam, said by phone on Wednesday. “That is why that spread between platinum and palladium has moved as much.”
Platinum was little changed at $906.95 an ounce by 12:10 p.m. in London and earlier this week reached the lowest since 2008. The metal has slumped 29 percent in the past year as slower economic growth cut demand and supply increased after South African mine strikes last year.
Palladium rose 1.1 percent to $660 an ounce. Prices, which reached a two-month high on Sept. 25, have declined 15 percent in the past year.
Shares in world’s largest platinum producers advanced. Anglo American Platinum Ltd., the biggest, climbed as much as 9.1 percent in in Johannesburg, paring this year’s loss to 28 percent. Impala Platinum Holdings Ltd., ranked second, gained 2.8 percent while Lonmin Plc surged as much as 20 percent in London.
Gold fell for a fifth day, the longest run since July, before a jobs report Friday that may provide evidence to Federal Reserve policy makers that the economy can withstand higher interest rates this year. Higher borrowing costs curb the appeal of bullion, which doesn’t pay interest or give returns like other assets such as bonds and equities.
The metal for immediate delivery lost 0.2 percent to $1,113.04 an ounce, after earlier touching a two-week low.
“The inevitable rate hike is bound to add downward pressure on gold,” Howie Lee, an analyst at Phillip Futures Pte in Singapore, said in a note. “But the Fed’s accomodative monetary policy means the downward move may not be as huge as we think.”
Silver added 0.2 percent to $14.5483 an ounce in London.