(Bloomberg) -- Gold just got left behind by one of its sister metals. After a demand-fueled rally over the past four months that’s seen prices hit a record, palladium for immediate delivery topped gold following a surge higher.
Palladium, which hasn’t traded at a sustained premium to gold in 16 years, has gained as buyers scramble for supplies of the metal used in vehicle smog-control devices. Demand has risen as consumers turn away from diesel toward gasoline-powered cars, which tend to use more palladium in autocatalysts.
“People are grasping for whatever ounces of material they can get” in the palladium market, Tai Wong, head of base and precious metals trading at BMO Capital Markets, said before Wednesday’s levels were hit. “It’s very expensive to borrow, and that is perhaps the biggest factor driving the spot price higher.”
Palladium for immediate delivery climbed as much as 1.7 percent to a peak of $1,252.68 an ounce, and was at $1,251.88 at 9:09 a.m. in London, according to Bloomberg pricing. Spot gold was 0.2 percent lower at $1,236.29.
“The supply of palladium is very restricted,” Chirag Sheth, a consultant with London-based Metals Focus Ltd., said by phone from Mumbai. “The narrowing of the ratio is as much about the strong performance of palladium as about the poor performance of gold.”
(Updates prices in fourth paragraph.)
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