June 2 (Bloomberg) -- Platinum and palladium climbed to eight-month highs on speculation that demand will rise after General Motors Corp. won approval to form a new company, signaling a quick trip through bankruptcy court.

GM plans to sell assets including the Chevrolet and GMC brands next month to a company backed by the U.S. Treasury. The slimmed-down General Motors will be supported by $65 billion in government loans. About half of the world’s platinum and palladium output goes into auto parts, according to Johnson Matthey Plc, a London-based researcher and metal refiner.

“After today, we consider the potential overhang of GM- related platinum selling to have passed and expect supply and demand fundamentals rather than technical issues to better determine the direction of platinum prices,” John Reade, UBS AG’s head metals strategist in London, said in a report.

Platinum futures for July delivery climbed $22.80, or 1.9 percent, to $1,243.40 an ounce on the New York Mercantile Exchange, gaining for the fifth straight day. Earlier, the price reached $1,254.60, the highest for a most-active contract since Sept. 23. The metal has advanced 32 percent this year.

Palladium futures for September delivery jumped $7.60, or 3.1 percent, to $251.35 an ounce, the highest since Sept. 25. The metal, up 33 percent this year, jumped the most in three weeks yesterday on speculation that GM and rival Chrysler LLC will emerge from bankruptcy better able to compete in world markets.

Palladium Price Outlook

“Palladium prices have been capped under $255 weekly resistance dating back to September of 2008, so a close over this level would represent a significant break and would project trending forces to around $300,” said Ralph Preston, a commodity analyst at Heritage West Futures Inc. in San Diego. “Until then prices are in an $88 trading range between $255 and $167.”

On May 31, Chrysler won court approval to sell most of its assets to a group led by Italian carmaker Fiat SpA. GM, the biggest U.S. car company, sought bankruptcy protection in New York yesterday.

“Even if GM does not rebound, there is always going to be somebody to step in and fill that vacuum,” Rob Kurzatkowski, a senior commodities analyst at OptionsXpress Holdings Inc., said today in an interview with Bloomberg Television from Chicago.

May Sales

GM, Chrysler and Ford Motor Co. reported May sales in the U.S. that fell less than analysts’ estimates as shoppers returned to showrooms, while Toyota Motor Corp. and Honda Motor Co. did worse than expected.

Johnson Matthey, which produces a third of all emission- control devices for automobiles, said on May 18 that it “had no clear prognosis for the balance of the platinum market in 2009.”

“The main difference between platinum and palladium is the supply,” Kurzatkowski said. “Palladium is the market that is oversupplied at the moment. Platinum is a more effective catalyst, it has better qualities than palladium, but if price becomes the major concern, manufactures can always switch to palladium.”

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: June 2, 2009 17:06 EDT