Business World

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. —


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