Gold just surpassed $1,270 through Thursday and is strongly gunning for the target of $1,275. There was a tiny resistance as the gold rate pulled back, but this is a common phenomenon for commodities that are reaching new levels.
As investors and traders struggle with a highly unpredictable and volatile market in the wake of rising interest rates, the bullion begins to look dominant in the market. In the coming weeks more traders will try to seek shelter from the uncertainties of the global market by buying gold.
This means that in the coming weeks, gold might just push past $1,300, which shouldn’t come as a surprise due to the expiration of bonds, weakening currencies, and lack of other options.
Market experts believe that as the price of gold soars, the other precious metals markets – in particular silver – will also follow suit. The silver futures market disappointed investors, losing more than $2.00 per ounce. But the one good thing to come out of it is modest rebounds. In the past week, silver prices rose by almost $1.00.
Silver prices are now on an upward trend from the disappointing lows investors saw in November.
And now for the first time in almost 10 years, palladium is locking horns with the bullion, gaining as much as 50 percent in nearly four months, at times surging past the value of gold to become slightly more expensive. There are no signs of palladium’s value to fizzle down in value. Just this month, palladium became the highest priced precious metal.
Palladium plays an important role in the exhaust system of cars, converting harmful pollutants into the less potent CO2 and water vapors. Both gases contribute to global warming, but seem less bullish compared to the gases released by unanalyzed engines. Palladium also finds use in several industries such as electronics equipment and jewelry.
The primary countries where palladium is mined include Russia and South Africa, often being mined along other precious metals like nickel and platinum. What’s interesting to note is that market supply isn’t responding to the growing demand. Many governments around the world are tightening their regulations on pollutants released from vehicles.
This is forcing car manufacturers to make eco-friendly vehicles, which require the use of palladium. Metals Focus, a consulting firm, published a report citing that the demand for palladium will increase because of its application in engine catalysts, reaching almost 8.5 million ounces this year.
Mines are unable to keep up with the demand for palladium because of internal turmoil. This is especially the case in South Africa because of worker disruption and difficulty in breaking even. Indeed many mines are barely able to break even. All isn’t looking bad for the palladium market however because its largest producer, Norilsk Nickel, in Russia announced its plan to spend over $12 billion in mine research in the next five years.
For now, both palladium and gold are great portfolio diversifiers for opportunistic investors looking to cash in on the rising interest rates.