Palladium Drops to 5-Year Low as China Demand Concerns Deepenby and
Chinese vehicle sales rose at slowest pace in three years
`Palladium is in a lot of trouble right now,' RJO Futures says
Palladium slumped to a five-year low as Chinese car sales increased at the slowest pace in three years, adding to concerns about weaker demand in one of the world’s biggest buyers of the metal. Gold also fell.
With a faltering economy and turmoil in the stock market hurting consumer confidence, China’s vehicle sales rose 4.7 percent last year, the smallest gain since 2012, China Association of Automobile Manufacturers data show. Palladium futures fell as much as 4.8 percent, while platinum, which is also mainly used in catalytic converters that cut harmful emissions, traded near a seven-year low.
China accounts for more than a fifth of global palladium demand and the recent market tumult is a further worry for investors already concerned by the nation’s slowest economic expansion in a generation. Equities in Shanghai were little changed on Tuesday as policy makers intensified efforts to stabilize the yuan.
“Palladium is in a lot of trouble right now,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “We’ve got large supplies out there, and we’ve already had a lot of people speculate this is a peak in demand for auto sales.”
Palladium futures for March delivery dropped 0.9 percent to settle at $469.80 an ounce at 1:04 p.m. on the New York Mercantile Exchange, after touching $451.50, the lowest since 2010. Platinum futures for April delivery fell 0.9 percent to $838.60 an ounce. The metal reached a seven-year low of $825 in December.
The slump in Chinese shares this year has sparked renewed demand for gold as a haven. Bullion reached a two-month high on Friday. Holdings in the funds gained for a third day on Monday, data compiled by Bloomberg show.
Gold futures for February delivery slid 1 percent to $1,085.20 an ounce on the Comex in New York. Prices may find resistance at about $1,100, according to Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen.
“Once we see some of the panic over China start to fade, the market will revert to the U.S. dollar and interest-rate developments,” Hansen said by phone. “That will provide some headwinds for gold.”
Silver futures for March delivery dropped 0.8 percent to $13.751 an ounce on the Comex, falling for a third session, the longest stretch in four weeks.