Palladium at Year High, Driving Precious Metals on Chinese Cars
Comment of the Day

August 10 2016

Commentary by Eoin Treacy

Palladium at Year High, Driving Precious Metals on Chinese Cars

This article by Eddie Van Der Walt and Ranjeetha Pakiam for Bloomberg may be of interest to subscribers. Here is a section:

Palladium is up 19 percent in the past month, the best performing commodity. Chinese vehicle sales in July gained the most in 17 months, data showed this week. A weaker dollar since late July has also spurred precious metals.

That “highlighted a generally supportive backdrop to palladium demand, exacerbated by ongoing concerns that output from top producers Russia and South Africa may be under threat,” said Jonathan Butler, a precious metals strategist at Mitsubishi Corp. in London. “We could see a bit of profit taking from here, but the $700 level seems to have been recaptured convincingly.”


Eoin Treacy's view

Chinese car sales coming in well ahead of expectations has been positive for palladium prices due to increased demand for catalytic converters but has also been a contributing factor in the outperformance of the German DAX Index.

Palladium found near-term support today and surged to a new recovery high. Prices are still quite overextended relative to the trend mean but a sustained move below this week’s low near $685 would be required to signal a reversionary move is underway. 

BMW broke back above the trend mean today for the first time this year and will need to hold the short-term progression of higher reaction lows if recovery potential is to be given the benefit of the doubt. 

Daimler is now testing the region of its MA but needs to sustain a move above it to confirm a break in the 18-month downtrend. 

Volkswagen has been ranging with a mild upward bias since the emissions scandal broke and is now testing the region of the trend mean. A sustained move above it would begin to signal a return to demand dominance beyond short-term steadying.  

While not related to palladium and automotive demand Siemens is notable for breaking above the €100 area this week. 

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