By Renita D. Young
NEW YORK, Dec 7 (Reuters) - Platinum's discount to fellow
precious metal palladium reached its highest level since 2001 on
Thursday, as the latter soared on heightened vehicle demand and
an ongoing supply deficit.
Palladium hit a high of $1,022.70 on Thursday, just
off a 16-year high from last week, while platinum hit a
low of $887.50 per ounce, putting it on track for its biggest
weekly loss in nine months.
The platinum discount widened to around $120 on Thursday,
the steepest since April 2001, according to Reuters data going
back to 1985.
"Palladium is powering on with the demand for more
vehicles," said George Gero, managing director of RBC Wealth
Management in New York.
"There's more need for palladium, which cannot be reclaimed
as easily or as often from junked automobiles as platinum."
Both platinum and palladium are used in catalytic converters
in car exhaust systems. However, palladium is in higher demand
in the United States and the Caribbean, particularly lately, as
consumers replace vehicles damaged in recent storms, Gero said.
U.S. automakers said vehicle sales rose 1.3 percent for
November versus the year prior, while China, the world's largest
auto market, saw a 2 percent rise in auto sales in October
compared with the year prior.
Platinum is more heavily used in diesel vehicles that have
fallen out of favor since the Volkswagen AG
emissions-rigging scandal of 2015.
Palladium has traded at a discount to platinum for most of
the last 16 years. Their fortunes have reversed, however, and
prices crossed in September for the first time since 2001. On
Nov. 28, palladium touched $1,028.70 per ounce, its highest
since February 2001.
"Platinum is trading on the correlation to gold and has gone
through a couple of key technical levels," said Ryan McKay,
commodity strategist at TD Securities in Toronto.
Gold broke through its recent trading range this week after
slipping below its 200-day moving average. Since mid-October,
prices had stayed between $1,265 and $1,300 an ounce as
investors poured money into the stock market, which hit a series
of record highs.
TD Securities, Citi Research and ABN Amro predict a comeback
for platinum in 2018 on industrial demand and as automakers may
substitute palladium for platinum in gasoline engines.
(Reporting by Renita D. Young, Editing by Rosalba O'Brien)
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