Palladium Hits Two-Year Peak, Gold Steadies


"Gains on Wall Street. . .fueled investment sentiment in the gold market."

Palladium prices hit a two-year high on Monday, with physical buying due to strong industrial and investment demand also boosting sister metal platinum to its highest level since August 2008.

A lower dollar against major currencies amid higher risk appetite also bolstered asset classes across the board from equities to gold and crude oil.

Sharp inflows into the first U.S. platinum and palladium ETFs and optimism about the auto industry's recovery have spurred buying of platinum group metals.

"There is strong investment demand in the U.S. because of the platinum and palladium ETFs, and the recovery in the auto sector, particularly in the very strong developing markets, such as China, has led to a pick-up in demand," said Carlos Sanchez, precious metals analyst at commodities consultancy CPM Group.

Palladium, used largely in the auto industry for catalytic converters, rose to $496.50/oz., its strongest price since March 2008. It was at $495/oz. at 10:52 a.m. EDT (1452 GMT), up from $490 late in New York in the previous session.

U.S. auto sales jumped to a seven-month high in March, led by a 41% surge at Toyota after the Japanese automaker offered the steepest discounts in its history to win back sales lost during its recent safety crisis.

"We are seeing strong demand for palladium from the industrial sector in Japan. There's also buying in platinum, but it's not that strong," said a physical dealer in Tokyo.

More than half of the world's output of PGMs is used in catalytic converters.

Platinum-Gold Link Weakens

Gains on Wall Street after optimistic economic data, including pending home sales and U.S. services sector data in March, fueled investment sentiment in the gold market.

Spot gold was at $1,128.40/oz., compared with $1,124.50 on Friday.

U.S. June gold futures were up $3.80 at $1,129.90/oz.

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