Palladium holds at record highs and gold rides uncertainty wave

Bengaluru — Tight supplies and a robust demand helped Palladium hold above $1,400/oz on Friday after surging to record levels in the previous session, while gold stood firm amid uncertainty around the partial US government shutdown.

Spot palladium had risen 1% to $1,410.50/oz by 3.37am GMT, having hit a record high of $1,434.50 on Thursday. The metal is on track to climb for a fourth week in its strongest weekly gain since the week ending September 21. It has risen about 12% so far this month.

The price of palladium, used mainly in emissions-reducing catalysts for vehicles, has leaped nearly 70% since mid-August. Prices for the metal overtook gold for the first time in 16 years early in December.

“This is the eighth consecutive year where palladium is going to be in deficit and there are no signs that it is going to go away,” said Dominic Schnider, head of commodities and Asia-Pacific forex at UBS Wealth Management in Hong Kong.

“The question people need to ask here is how long it would take for the car manufacturers to switch to platinum, which is trading around $800.”

According to market watchers, shares in palladium exchange-traded funds (ETFs) tracked by Reuters have nearly halved from January 2018 as people took delivery and sold or gave the metal for lease due to insufficient supplies.

Spot gold was steady at $1,292/oz, while US gold futures were firm at $1,291.60/oz.

“Uncertainties around the US-China trade war and the US government shutdown are supporting gold prices,” said Brian Lan, MD at dealer GoldSilver Central in Singapore.

“Also, the US dollar did not react to conflicting reports about the removal of tariffs on Chinese goods, which is also leading to lack of movement in gold.”

A Wall Street Journal report on Thursday saying that US treasury secretary Steven Mnuchin had considered easing tariffs imposed on Chinese imports lifted broad market sentiment, although a treasury spokesperson later denied the report.

Spot gold was set for its fifth consecutive weekly gain, supported by expectations that the US Federal Reserve may not raise interest rates this year and uncertainties around Brexit.

“[Gold] does need a trigger to spark it upwards, either in the way of a weaker dollar, renewed stumbles in US equities or clearer indications of slowing US growth,” said INTL FCStone analyst Edward Meir.

Spot gold is due for a sharp move, as its consolidation within a neutral range of $1,285/oz-$1,299/oz is ending, according to Reuters technical analyst Wang Tao.

In other metals, platinum rose 0.3% to $807.50/oz, while silver was steady at $15.53.