Platinum, Palladium Climb to 2016 Highs, Enter Bull Marketsby
Platinum and palladium climbed to the highest in more than three months, entering bull markets, on speculation that infrastructure spending in China will boost demand for the metals used in auto pollution-control devices.
Chinese transportation and infrastructure-related stocks rose after the country’s premier pledged at the country’s annual parliamentary meetings to give top priority to growth and development, with infrastructure and fixed asset investment central to that strategy.
Platinum fell for a third straight year in 2015 as the economy in China, the world’s largest auto market, headed for its slowest growth in a generation. Last week, platinum posted the biggest gain since October, while palladium surged the most since 2001, helped by the outlook for low borrowing costs and rising auto sales in the U.S.
“Finally, people are buying commodities with the idea that economic growth globally is about to improve,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “So platinum and palladium are the big winners in precious metals based on eventual global growth.”
Platinum futures for April delivery added 1.6 percent to settle at $1,002 an ounce at 1:09 p.m. on the New York Mercantile Exchange, after touching $1,011.10, the highest since October. Palladium for June delivery advanced 2.6 percent to $577.60 an ounce, and touched $578.10, the highest since Nov. 12.
The gains for each mark a more-than 20 percent increase from recent closing lows in January, meeting the common definition of a bull market.
Investors place the odds of a U.S. interest-rate increase March 16 at just 8 percent, down from 51 percent at the start of the year, according to data compiled by Bloomberg. Lower rates boost the allure of precious metals because they don’t pay interest, unlike some competing assets.
“In December, people thought there may be four hikes this year,” Thorsten Proettel, a commodity analyst at Landesbank Baden-Wurttemberg, said by phone from Stuttgart, Germany. “That’s a game changer.”
- Investors boosted holdings in exchange-traded funds backed by gold by 262.3 metric tons this quarter, the most since the three months ended June 2010.
- Gold and silver futures fell on the Comex in New York.