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Platinum Market Analysis
August 9, 2010

How has palladium appreciated compared to gold and platinum?


''A spate of soft U.S. economic data has led to talk that the Federal Reserve may announce additional monetary easing, such as bond purchases, after its meeting on Tuesday.

"It is the weakness in the United States, and the potential for some loosening in monetary policy measures, that are really positive for gold," said Michael Widmer, an analyst at Bank of America-Merrill Lynch.

The central bank was expected to renew its vow to keep interest rates near zero for an extended period.

The U.S. dollar rose against major currencies as investors squared up positions a day ahead of the Fed announcement.

"After breaking down for most of the year, the inverse dollar/gold relationship may be reasserting itself," said HSBC analyst James Steel in a note.

The usual inverse relationship between gold and the dollar loosened this year as extreme risk aversion benefited both assets, but it has since shown signs of a resurgence.


Silver was at $18.29 an ounce against $18.31. Platinum was at $1,540 an ounce against $1,563.25, while palladium was at $475.50 an ounce versus $484.05.

The ratio of gold to platinum -- or how many gold ounces are needed to buy an ounce of platinum -- fell to a two-week low of 1.29 on Monday, meaning the yellow metal is becoming increasingly expensive compared with platinum, analysts said.

Appetite for platinum group metals, which are widely used in car manufacturing, has been tempered by relatively soft auto sales data. Data showed Chinese car sales rose at their slowest rate in 15 months in July as the world's largest auto market cooled.

Palladium was still 17 percent higher for the year on strong investment demand and economic optimism, compared with platinum's 5 percent and gold's 10 percent.''

*This information is solely an excerpt of a third-party publication and is incomplete. Please subscribe to the referenced publication for the full article. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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