The scramble for palladium supply has taken the precious metal within striking distance to its costliest cousin - gold.
Palladium, used as an autocatalyst in gasoline-fueled vehicles, climbed to a record for a fourth time this month as users of the precious metal compete for limited supply. Investors continue to pull the commodity from exchange-traded funds, taking holdings to the smallest in almost a decade. The cost to borrow the raw material for a month climbed to more than triple the yield on 10-year Treasuries.
“This is a very tight market, there’s not enough supply for the number of buyers right now,” Daniel Ghali, strategist at TD Securities in Toronto, said in a telephone interview. “As tight as it is, it takes very little to move this market” because of the thin volume traded, he said.
Palladium for immediate delivery climbed as much as 1.8% to a record $1 204.71 an ounce, before trading at $1 180.78 at 13:47 in New York, according to Bloomberg pricing. With spot gold trading at $1 220.88, an ounce of the yellow metal now buys just about 1.03 ounces of palladium, the least since 2002.
In the futures market, palladium for March delivery fell 0.6% to settle at $1 144.60 an ounce on the New York Mercantile Exchange. Gold for February delivery closed 0.4% lower at $1 226 an ounce on the Comex, with dollar strength exerting downward pressure on the commodities.
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