Palladium Threatens Gold’s Reign as Most Precious Metal – by Amrith Ramkumar (Wall Street Journal – December 2018)

Gold and palladium prices have narrowed to their closest proximity since 2002

A rare silvery-white material is close to dethroning gold as the most valuable precious metal. Palladium, which is used to filter emissions in gasoline car engines, has climbed to record highs recently. Prices are up more than 25% since the start of August and about 10% for the year, making the metal one of the market’s best-performing assets of 2018.

Meanwhile, gold is down about 5% for the year, with investors preferring the safety of the dollar and U.S. Treasurys amid market volatility. A stronger dollar makes metals denominated in the currency more expensive for overseas buyers, while the prospect of higher interest rates makes gold less attractive than interest-bearing assets.

These dynamics can affect palladium as well. But it has been boosted by projections showing supply shortages and steady auto demand.

Palladium has climbed to about $1,180 a troy ounce; gold has fallen to $1,245. The difference between the two is the narrowest since 2002, according to Dow Jones Market Data. That palladium is close to eclipsing gold is the latest sign investors remain cautious about the outlook for bullion.

Most-active palladium futures were up 1.3% Tuesday. Gold added 0.6% as long-term Treasury yields fell, bucking a trend that has held for much for the year. Bond yields fall as prices rise.

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