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Gold and Palladium Prices Rise Amid Economic Optimism and Global Demand

Strategic Insights

— 2 min read

Positive economic data and optimism about the economic recovery fueled a rise in gold and palladium prices on April 14, 2010. The US retail sales increased by 1.6% in March, exceeding economist predictions, which boosted market appetite for metals and pressured the US dollar. A weaker greenback made gold less expensive for buyers using other currencies, supporting demand. Palladium prices rallied sharply, driven by end-user buying and exchange-traded fund (ETF) investments, particularly in the ETFS Physical Palladium Shares (PALL) fund.

Key Takeaways:

  • Gold futures rose 0.5% to settle at $1,159.60 an ounce on the Comex division of the New York Mercantile Exchange, with June gold rising $6.20.
  • Palladium prices rallied by 5% to settle at $548 an ounce, the highest front-month price since March 2008, driven by exchange-traded fund buying and end-user demand.
  • The ETFS Physical Palladium Shares (PALL) fund, launched in January, had accumulated nearly 580,000 ounces through April 12, with holdings jumping 20,000 ounces from Thursday to Friday.
  • Worldwide, palladium holdings in five physically backed ETFs tracked by CPM Group increased by almost 600,000 ounces to over 1.7 million ounces in the year through April 9.
  • Palladium demand was driven by industrial consumers wanting to get in before prices rise further, with more than half of the demand coming from use in automotive catalytic converters.
  • The ICE Futures U.S. Dollar Index was down 0.372, or 0.5%, at 80.135 points, making the dollar-denominated metal less expensive for buyers using other currencies.

Statistics:

  • US retail sales increased by 1.6% in March, exceeding economist predictions of a 1.3% rise.
  • Gold futures rose $6.20, or 0.5%, to settle at $1,159.60 an ounce on the Comex division of the New York Mercantile Exchange.
  • Palladium prices rallied by 5%, with the most active June contract rising $26.20 to settle at $548 an ounce.
  • The ETFS Physical Palladium Shares (PALL) fund accumulated nearly 580,000 ounces through April 12.
  • Worldwide, palladium holdings in five physically backed ETFs tracked by CPM Group increased by almost 600,000 ounces to over 1.7 million ounces in the year through April 9.
  • The ICE Futures U.S. Dollar Index was down 0.372, or 0.5%, at 80.135 points.

Sources:

  • Dow Jones Commodities News via Comtex, "Gold futures rise as economic data stokes market optimism"
  • Dow Jones Newswires, "Palladium prices rally sharply amid continued optimism about economic recovery"
  • ETFS Physical Palladium Shares (PALL) fund
  • CPM Group
  • ICE Futures U.S. Dollar Index
  • US Commerce Department, "Advance Retail Sales: March 2010"
  • Jon Nadler, analyst with Kico Metals

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