· Palladium is crucial in the making of catalytic converters used in exhaust systems of vehicles, and an improvement in demand from the auto sector has supported the metal's surge.
· "Demand (for palladium) is increasing year by year because of catalyst demand for gasoline engines. Environmental requirements are getting stronger, which means more palladium is needed in (manufacturing) a car," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
· Furthermore, the supply deficit is likely to widen this year as stricter emissions standards increase demand for catalytic converters, Britain-based autocatalyst manufacturer Johnson Matthey said last week.
· Spot palladium rose to an all-time high of $1,500.5 per ounce and was up 1.3 percent at $1,499 as of 0420 GMT. The autocatalyst metal has gained almost 19 percent so far this year, making it one of the best performing metals.
· Gold prices hit their highest since April 19, 2018 as the dollar was capped on falling U.S. Treasury yields and optimism surrounding trade talks between the United States and China.
· U.S. President Donald Trump said on Tuesday that trade talks with China were going well and suggested he was open to pushing off the March 1 deadline to complete negotiations.
Progress in trade discussions between the world's top two economies has whisked off the safe-haven appeal for the dollar, making gold more attractive to investors.
· Spot gold was up 0.2 percent at $1,343.51 per ounce after rising to a high of $1,346.73 earlier in the session.
U.S. gold futures dipped 0.2 percent to $1,342.6 an ounce.
· Investors are now looking ahead to the release of U.S. Federal Open Market Committee's minutes from its Jan. 29-30 policy meeting at 1900 GMT.
· "The dovish shift in U.S. Federal Reserve language over the year-to-date has improved the fundamental outlook for gold prices," Fitch Solutions said in a note.
"A less steep trajectory for U.S. rate hikes bolsters our existing view that U.S. dollar gains are behind us and that this will help put a floor under gold prices."
· Spot gold may peak around a resistance at $1,351 per ounce, as suggested by a projection analysis and a rising trendline, according to Reuters market analyst Wang Tao.
· Among other precious metals, platinum fell 0.2 percent to $815.50 per ounce, while spot silver was up 0.3 percent to $16.02 an ounce.
· The gold market’s fresh 10-month high could be the start of a renewed uptrend in the precious metal as the market has broken important resistance levels, according to some economists.
With new momentum in the precious metals market, some analysts have said that it could be only a matter of time before prices break above last year’s highs around $1,365 an ounce. Many analysts have noted that gold will continue to benefit as the U.S. dollar struggles to find momentum in an environment of growing economic uncertainty and low interest rates.
· “Gold is breaking out above its previous swing high in what has been an extremely favorable technical and fundamental landscape,” said Bill Baruch, president of Blue Line Futures, in a note to clients. “We believe there to be significant upside given that we find the Dollar near the high end of its range.”
Joshua Mahony, market analyst at IG, said in a note that the latest breakout in gold could ultimately push prices to as high as $1,375an ounce with initial resistance coming in at $1,357. He added that gold price would have to fall back below $1,323 to neutralize the current rally.
· Christopher Vecchio, senior currency strategist at DailyFX.com, said that he sees initial resistance for gold at $1,348 an ounce, which represented the consolidation range during the first two weeks of the month.
“Gold prices continue to charge higher in an environment marked by heightened political uncertainty in the Eurozone, the U.K., and the U.S.,” he said.
· David Madden also sees the potential for gold prices to rally nearly another 1%. However, he has said that he expects any rally to be a grind higher as he does not expect to see significant weakness in the U.S. dollar.
“The commodity has been in an upward trend since mid-November, and should it continue it might retest the $1,350 area,” he said in a note to client.
· Commodity analysts have been turning more bullish on gold since last month after the Federal Reserve signaled that it would pause its interest rate hike cycle for the foreseeable future. Analysts have noted that a “patient” U.S. central bank, will keep real interest rates low and provide less of a tailwind for the U.S. dollar. Growing economic risks and the rising fear of a global recession will also keep pressure on equity markets, economists have also said.
Reference: Kitco,CNBC
Thai
Eng