Palladium Tumbles Most Since 2011 in New York as Gold Slides

  • China's palladium imports slumped 42 percent in July
  • Gold futures post the biggest decline in more than a month

Palladium fell by the most since 2011 on concerns that the market is heading for oversupply. Gold dropped as gains in U.S. consumer confidence damped demand for a haven.

In South Africa, mine output of platinum and related metals, including palladium, surged 84 percent in June from a year earlier, official data showed Tuesday. The country is the world’s top palladium producer after Russia. Futures in New York plunged as much as 8.1 percent, the most since December 2011.

While most industrial metals climbed Tuesday on easing concerns over Chinese economic growth after the nation cut interest rates, palladium failed to get a boost because of speculation that the move won’t be enough to buoy auto sales in the country. China accounts for about 22 percent of global demand for the metal used in pollution-control devices, according to Bloomberg Intelligence data. Prices are heading for a third straight monthly decline.

“The low interest rates and stimulus in China can’t create new demand any time soon," James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. "If countries continue to overproduce and there’s slack demand, we have to go down to these low prices."

On the New York Mercantile Exchange, palladium futures for September delivery dropped 6.1 percent to settle at $540.10 an ounce at 1:06 p.m., after touching $528.20, the lowest since September 2010.

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China’s imports of the metal plunged 42 percent to 1.27 metric tons in July from a year earlier, according to customs data released last week. Chinese consumers bought the fewest passenger vehicles in 17 months in July. Palladium is set to record its smallest shortfall in four years in 2015, according to Johnson Matthey Plc.

On the Comex, gold futures for December delivery fell 1.3 percent to close at $1,138.30 an ounce in New York, the biggest drop since July 20.

The Conference Board’s index of consumer confidence in August reached the second-highest level in eight years, which gives the Federal Reserve support to raise interest rates for the first time in nearly a decade. Higher rates curb the appeal of bullion because it doesn’t pay interest or offer returns, unlike competing assets.

Silver fell as much as 1.6 percent on the Comex, while platinum dropped as much as 2.1 percent on the Nymex.

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