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Palladium Soars to New Record, Gold Tumbles on Talk of Brexit Progress

Investing.com – Auto catalyst metal palladium rode the wind of a supply crunch to reach new $1,700 record highs on Tuesday, becoming the world’s most valuable precious metal, as prices of gold fell on talk of a potentially smoother U.K. exit from the European Union.

The price of spot palladium reached an all-time high of $1,740.40 per ounce before consolidating at $1,736.25 by 2:43 PM ET (18:43 GMT), up $25.25, or 1.5%, on the day.

Palladium futures traded on New York Mercantile Exchange’s COMEX division settled up $9.60, or 0.6%, at $1,696.60, after its own record high at $1,705.55.

Palladium, used in vehicle exhausts to reduce harmful emissions, has rallied more than $300 since early August when it touched the lowest level in nearly two months.

“Palladium is in short supply. It will continue to be so and higher prices maybe till $2,000 is well within the realm of possibilities, particularly if we see automotive activity rebound a bit,” Bart Melek, head of commodity strategies at TD Securities in Toronto, said, Reuters reported.

Gold, meanwhile, fell back sharply under the $1,500 per ounce level it attempted to return to this week, as higher-risk appetite prevailed amid a rally on Wall Street.

Gold prices tumbled almost 1% as reports suggested the EU and U.K. were closing in on a deal to avert a disorderly and economically damaging no-deal Brexit on Oct. 31.

U.S. gold futures for December delivery settled down $14.10, or 0.9%, at $1,483.50 per ounce.

Spot gold was down $12.71, or 0.9%, at $1,480.45.

The threat of a disorderly Brexit has been one of the cardinal factors behind the surge in European portfolio demand for gold this year – the European Central Bank’s negative interest rates being the other, and they too are at least partly a reaction to the negative impact of Brexit uncertainty. A deal would remove the worst-case scenario for investors and for the European and global economy.

“Risk aversion is not at all keen Tuesday despite traders and investors backing off on their initial upbeat assessment of the U.S.-China ‘Phase 1’ trade agreement reached last week, and which has yet to be signed,” Jim Wyckoff, senior market analyst at precious metal group Kitco, wrote in a commentary.

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