Research

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Daily Resources Overview

 

Spot palladium rose to a peak of $1,458 per ounce, its highest onrecord, and was up 1.5 percent at $1,454 per ounce as of 1305 GMT. Autocatalyst manufacturer Johnson Matthey said in a report last week that thedeficit in the palladium market will widen dramatically this year as stricteremissions standards increase demand. "The market is fundamentallystrong," Julius Baer analyst Carsten Menke said. "(The) ongoingdeficit and auto catalyst producers saying they are not seeing broad-basedsubstitution from palladium to platinum really reinforce the prevailingpositive sentiment." Both metals are primarily consumed by automakersfor use in catalytic converter manufacturing, but platinum is more heavily usedin the diesel vehicles that have fallen out of favour since the Volkswagenemissions-rigging scandal broke in 2015. Palladium, unlike platinum, hasbenefited from a switch to petrol engines and expectations for growth in hybridelectric vehicles, which tend to be partly gasoline-powered. This has helpedthe metal largely ignore falling car sales across the globe. "Industrialdemand is good, but not booming considering how weak the car markets are.(However) the case for a multi-year deficit is much more compelling, and thereis a very good price trend, attracting a lot of investment demand," Menkesaid.

However, while prices are likely to climb in the short term, hesaid, "in the longer term, say the next 12 months, assuming global carsales fail to rebound as the global economy slows, prices will be pushedback". Meanwhile, spot gold rose 0.3 percent to $1,325.51 per ounce,having earlier hit its highest since the end of January at $1,326.07 as thedollar weakened on rising optimism for a trade deal between the world's twolargest economies. U.S. gold futures rose 0.5 percent to $1,328.90 per ounce."The market will be looking closely at U.S. and China data and gold couldtarget a retest of the $1,326 level," said Nicholas Frappell, globalgeneral manager at ABC Bullion. Investors will also be looking ahead to minutesof the U.S. Federal Reserve's January policy meeting on Wednesday for furtherclarity on interest rate hikes this year. Higher rates tend to weigh onnon-yielding gold.


 
Posted on 19/02/2019 9:00:00 AM

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