Platinum, Palladium Pausing After Price Run Up

UNITED STATES August 04 2016 9:21 AM

NEW YORK (Scrap Register): Platinum and palladium are pausing after hitting multi-month highs, with an absence of exchange-traded-fund stock inflows lately and a U.S. auto market that is showing signs of losing some momentum, said Commerzbank in a snippet. 

Around 8 a.m. EDT, spot platinum was nearly down $3.50 to $1,159.50 an ounce, while palladium was down $7.15 to $707.35. 

Wednesday saw platinum climb for a time to nearly $1,180, putting it at its highest level since May 2015. Palladium gained to achieve a temporary 10-month high of over $720 per troy ounce, Commerzbank added.

“On the back of the rally enjoyed by the two precious metals, which are chiefly used in the automotive industry, platinum has significantly narrowed the gap to gold of late. This morning it costs just shy of $200 per troy ounce less than gold, as compared with nearly $350 at the end of June,” said analysts at Commerzbank.

The recent rally in platinum and palladium was driven in large part by speculation, as reflected by the build in net-long positioning in the futures markets in recent weeks, the bank points out. By contrast, platinum and palladium ETFs are still showing no inflows. 

On the contrary, Bloomberg reported an outflow of over 47,000 ounces from palladium ETFs on Wednesday. Meanwhile, the automotive industry in the U.S. is clearly losing momentum; the seasonally adjusted annualized vehicle sales rate climbed by 1.4% year-on-year to 17.77 million units in July. 

Auto manufacturers are offering consumers greater incentives to buy in a bid to counter the faltering growth. Nonetheless, there are fears that vehicle sales this year could fall short of last year’s high. Auto sales are important for platinum and palladium since the main industrial use of the metals is for catalytic converters.