Spot palladium prices are seeing a sharp rise in early action today. Just a few short weeks ago, palladium pushed past gold to become the most precious of the precious metals. The metal now appears to be looking to extend its lead.
What’s Behind the Rally?
Palladium has taken another record as the metal continues to increase in premium over platinum and gold. A recent article from bloomberg.com cited a shortage of the metal to be used in auto catalysts for gasoline-powered vehicles as the primary reason behind the rally. The supply situation of the metal does not appear to be easing anytime soon.
Both platinum and palladium are used in the production of catalytic converters. Platinum had been the more expensive of the two metals for much of the last 100 years, but has seen declining demand from diesel carmakers in the aftermath of the Volkswagen emissions scandal.
The higher price of palladium could, however, reach a tipping point as automakers could eventually switch back to cheaper platinum. Some analysts do not see this as a viable solution, however, as it would take significant time to implement and necessary adjustments would need to be made to exhaust systems.
Spot palladium is sharply higher today, recently trading at $1,338 per-ounce. The metal is up $36 per-ounce on the session thus far and could potentially see additional gains as the day progresses.
The gold market is also higher, with spot gold up $7.18 on the day at $1293.38. The gold market continues to hover near key upside resistance around the $1,300 area and appears poised to crack that resistance in the coming days.
The gold market is getting some support in recent action from a pullback in the dollar, an increasingly dovish Fed and overall risk aversion. The current state of geopolitics as well as the threat of a global slowdown could potentially keep investors interested in gold, palladium and other alternative asset classes.