Palladium eyes $1,500/oz in record surge; gold hits 10-mth high
* Palladium peaks at $1,491/oz, strongest on record
* Dollar slips on U.S-China trade optimism
* GRAPHIC-2019 asset returns: http://tmsnrt.rs/2jvdmXl
By Arpan Varghese and Eileen Soreng
Feb 19 (Reuters) - Palladium scaled a record peak to within
striking distance of the $1,500 level on Tuesday fuelled by a
sharp supply deficit, while gold climbed 1 percent to hit a
10-month high on a weaker dollar and global growth jitters.
Spot palladium was 1.9 percent higher at $1,484 per
ounce by 2:12 p.m. EST (1912 GMT), having earlier soared to an
all-time high of $1,491.
A sustained deficit in supply was likely to widen this year
as stricter emissions standards increase demand for catalytic
converters, Britain-based autocatalyst manufacturer Johnson
Matthey said last week.
Adding to an already strained supply scenario for palladium,
was the likelihood of an improvement in demand from the auto
sector, given the expectations of a U.S.-China trade deal
materializing, said Bart Melek, head of commodity strategies at
TD Securities in Toronto.
"If we were already high and tight when the demand
environment didn't look all that promising, we are certainly
going to get tighter when demand improves," he said.
A new round of trade talks between Washington and Beijing
was scheduled for Tuesday.
While both platinum and palladium are primarily used by
automakers in catalytic converters, platinum is more heavily
used in diesel vehicles, which have fallen out of favour since
Volkswagen's emissions-rigging scandal broke in 2015.
Unlike platinum, palladium has benefited from the switch
away from diesel engines and expectations for growth in hybrid
electric vehicles, which tend to be partly gasoline-powered.
This has helped cushion the metal from falling car sales
However, analysts said palladium has risen too fast too soon
and was bound for a correction.
"Palladium is a bubble and is moving much above what
fundamentals suggest," said Gianclaudio Torlizzi, managing
director at consultancy T-Commodity in Milan.
Meanwhile, the dollar backed away from a two-month high hit
last week on increasing optimism for a breakthrough in the trade
talks, bolstering appeal for gold.
Spot gold gained 1 percent to $1,339.50 per ounce,
having earlier touched its highest since April 20 at $1,341.78.
U.S. gold futures settled up 1.7 percent at $1,344.8.
"We are getting more evidence of slowing (global) growth,"
said SP Angel analyst Sergey Raevskiy.
"There were some dovish comments from Bank of Japan and the
European Central Bank."
Dovish signals from Japan's central bank and the ECB
compounded worries over a global slowdown, and followed weak
data from the United States and China.
Also, investors will scan the minutes of the U.S. Federal
Reserve's last policy meeting on Wednesday for more guidance on
interest rate increases this year. Higher rates tend to weigh on
Among other precious metals, platinum gained 1.8
percent to $816 per ounce, while silver rose 1.2 percent
(Additional reporting by K. Sathya Narayanan in Bengaluru;
editing by Jonathan Oatis and Marguerita Choy)
First Published: 2019-02-19 03:13:03
Updated 2019-02-19 21:28:59
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