Supply woes push palladium to record high; gold hits near two-month high on subdued US Treasury yields
AUTO catalyst metal palladium hit a record high on Wednesday, fueled by supply concerns and wider gains in precious metal prices, with gold jumping by more than 1%.
Palladium surged to an all-time high of $2,891.20 per ounce and was up by 4.3% at $2,880.10 per ounce at 1:41 p.m. EDT (5:41 p.m. GMT).
“We’re looking at pretty decent automotive and industrial use for this catalyst,” said Bart Melek, head of commodity strategies at TD Securities, adding that with a very tight market projected, it would be difficult to source the metal.
Prices of palladium, used in catalytic converters to clean car exhaust fumes, have risen by 24% since Russia’s Nornickel, the world’s largest producer, partly suspended operations at two of its mines on Feb. 24.
There might be technical price corrections but given the robust fundamentals for palladium, a big adjustment to the downside is highly unlikely, Melek said.
Elsewhere, spot gold hit a near two-month high of $1,797.41 per ounce, helped by subdued US Treasury yields and a weaker dollar.
Gold was last up by 0.9% at $1,792.77. US gold futures settled up by 0.8% at $1,793.1.
“Gold’s pain over the last couple of months has been the rising Treasury yields and now that has pretty much been alleviated,” said Edward Moya, a senior market analyst at OANDA.
“The current outlook for the global economy is still mixed. You’re going to see a much more cautious approach in the next quarter and that’s probably going to see gold start to see some safe haven flows,” Moya added. Gold, considered a hedge against inflation given the unprecedented stimulus doled out by central banks, has been in a tussle with yields, since higher yields translate into a higher opportunity cost of holding the non-interest bearing bullion.
Benchmark 10-year US Treasury yields languished below 1.6%, reducing the opportunity cost of holding non-interest bearing gold, while the dollar ticked lower.
Market participants await a European Central Bank meeting on Thursday and a US Federal Reserve policy meeting next week. —