Palladium Resumes Upward Charge to Head for Seventh Monthly Gain

(Bloomberg) -- Palladium is headed for its longest string of monthly gains since 2014, extending a rally that's driven prices to records.

The metal is up 22 percent in 2019, spurred on by shortages of the metal used in vehicle pollution-control devices as car manufacturers seek to meet stricter emissions standards. The scramble for supply has continued despite a slowdown in global car sales, the sector which accounts for the largest portion of palladium demand.

Spot palladium rose 0.9 percent to $1,544.50 an ounce at 1:53 p.m. in New York, after dropping 2.1 percent yesterday. The metal reached a record $1,567.44 earlier this week. In the futures market, palladium for June delivery rose 1.6 percent to settle at $1,501.50 an ounce on the New York Mercantile Exchange.

“Most of the economic news is gloomy and January car sales weren't good, yet palladium keeps on rising,” said Matthew Turner, precious metals analyst at Macquarie Group Ltd. “The possibility of substituting for platinum seems less likely as manufacturers have moved their research and development onto electric cars and these factors have outweighed slowing car sales.”

Outflows from palladium-backed exchange traded funds have slowed in recent weeks, with holdings having sunk to the lowest in 10 years as inventories were used to cover the supply deficit. This slowing could be a sign that there is little remaining stock to meet existing demand, said Turner.

He sees the price continuing to rise in the near term. However, the metal's close relationship with platinum will eventually force the two precious metals to trade closer to parity, Turner said.

In other precious metals, spot gold slipped Thursday after a report showed the U.S. economy grew faster than expected in the fourth quarter. The 2.6 percent annualized rate of gains in gross domestic product from October to December compared with the 2.2 percent median estimate of economists surveyed by Bloomberg, suggesting growth could be stronger for longer as the Federal Reserve takes a patient approach to interest rates.

Platinum has benefited from palladium's run, gaining 6.1 percent in February, heading for the best month since January 2018. Silver was on course for the first monthly decline in three.

--With assistance from Caleb Mutua.

To contact the reporter on this story: Rupert Rowling in London at rrowling@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Joe Richter, Patrick McKiernan

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