Palladium hits another record, inches closer to the price of gold

Palladium futures rallied Friday to their highest settlement on record, extending last year’s advance and narrowing their price spread with gold to the smallest in roughly 16 years.

“Palladium has been on a multi-year run that shows few signs of abating,” John Ciampaglia, chief executive officer of Sprott Asset Management, wrote in a recent report. “Palladium is close to becoming the most ‘precious’ of precious metals.”

Palladium, which is used in pollution-controlling catalytic converters on gasoline-powered vehicles, has been significantly narrowing its spread with gold prices.

‘Palladium is close to becoming the most “precious” of precious metals.’

John Ciampaglia, Sprott Asset Management

On Friday, March palladium PLH9, +3.77%  added $34.10, or 2.8%, to settle at $1,234.40 an ounce. The finish was the highest based on FactSet records dating back to November 1984, topping the previous record settlement of $1,201.30 from Dec. 19.

February gold GCG9, -0.66%  fell $9, or 7%, to finish at $1,285.80 an ounce as a rally in the U.S. stock market and stronger-than-expected jobs data dulled investment demand in the yellow metal. That helped narrow its spread with palladium futures down to $51.40, the lowest since November 2002, according to Dow Jones Market Data. The last time palladium settled higher than gold was in October 2002.

Overall, growing global demand for the industrial metal has fed worries about tighter supplies.

“While the escalating U.S.-China trade war hurt many commodities in 2018, it couldn’t dent palladium’s rise,” said Ciampaglia. “Demand for palladium was especially strong last year, as environmental concerns have prompted a global shift from diesel to gasoline and hybrid vehicles.”

“Not even the 2018 slowdown in China’s auto market, the world’s largest, dampened demand,” he said.

Auto sales in China, the biggest global market, were on track for their annual decline in three decades

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