Palladium rose to its highest level in nearly three months on Thursday on reports of strong car sales from major automakers, continuing a trend in which the component of gasoline engine autocatalysts gains at the expense of platinum. Gold prices were little changed ahead of the US nonfarm payrolls data for September due out on Friday.
Ford Motor Co said on Thursday its US sales rose 23 percent in September, the best level since 2004, while General Motors said its total sales rose 12 percent. Palladium is chiefly used in autocatalysts for gasoline engines, while platinum is mainly used in autocatalysts for diesel engines. The strong car demand is seen as bullish for palladium, though platinum is still suffering after Volkswagen's emissions scandal last week raised concerns about diesel engine demand.
"Strong vehicle sales across the board, ex VW, helped palladium today," said Tai Wong, director of base and precious metals trading for BMO Capital Markets. "We're seeing a continuing trend of strength in palladium at the expense of platinum." Spot palladium was up 3.3 percent at $672 an ounce as of 3:20 pm EDT (1921 GMT), after rising as high as $679.50, its highest level since July 7. The rally accelerated when the metal broke through its previous high for the week at $669. Platinum was down 0.5 percent at $899.50.
Spot gold was down less than 0.1 percent at $1,114.06 an ounce, after dropping to $1,110.75, its lowest level since September 16. US December gold futures settled down $1.50 an ounce at $1,113.70. Friday's payrolls data is being watched for clues on whether the Federal Reserve will raise interest rates this year. Expectations for a strong report rose after an upbeat reading of US private employment on Wednesday, pressuring gold. "All eyes are on the upcoming US NFP data and this will set the tone for trading," Naeem Aslam, chief market analyst at Ava Trade, said.
Expectations the Fed is set to raise rates this year for the first time in nearly a decade have pressured gold, as a rate hike would potentially lift the opportunity cost of holding non-yielding bullion while boosting the dollar. "Traders are rearranging deck chairs ahead of the payroll data tomorrow," Wong said. "Unless the number is a real outlier, reaction may remain modest since most people don't think that there will be a rate move at the October Fed meeting." Silver was down 0.1 percent at $14.50 an ounce.
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