MARKETS WRAP

PALLADIUM LEADS METALS’ SLIDE

PALLADIUM prices fell nearly 13 percent yesterday as China’s Covid-led lockdowns soured the demand outlook for the autocatalyst, while looming US interest rate hikes took the shine off gold.

Spot palladium fell 10.6 percent to $2 122.21 (about R33 029) an ounce by 4.19pm, after hitting its lowest since March 29 at $2 068.82 an ounce.

Commodities across the board dipped as concerns grew over prolonged lockdowns in Shanghai and potential increases to US interest rates hurting global growth and demand.

The metal, used in vehicle exhausts to curb emissions, has retreated nearly 40 percent since hitting a record high in early March on concerns that the war in Ukraine could cut supply from key producer Russia.

“Much of the angst in palladium is surrounding the potential problems with the Chinese economy,” said head of commodity strategies at TD Securities, Bart Melek.

“(With) an increasing amount of that country being shut, chances are vehicle demand and economic activity broadly aren’t going to be as strong as we thought, and this is offsetting a lot of the potential shortage concerns associated with the Russian sanctions,” Melek added.

Gold was also down 1.8 percent to $1 895.36 an ounce, while US gold futures fell 1.9 percent to $1 896.90 an ounce.

“It seems that fears about rate hikes have gotten the upper hand as of late,” said Julius Baer analyst Carsten Menke.

Although bullion is considered a hedge against soaring inflation and uncertainties such as the Ukraine conflict, rising interest rates dampen its appeal by increasing the opportunity cost of holding the non-interest bearing asset.

Platinum fell 1.9 percent to $913.17 an ounce after touching a trough since December 2021, while silver dropped 2.7 percent to $23.49 an ounce, after hitting a two-month low. I Reuters