There is a strong dynamic on the precious metals market with the palladium reaching new record levels of 1,471 USD per ounce. The stricter emissions standards raise demand for the metal in automotive catalysts, while the supply experience deficit.
Meanwhile, the gold is traded at levels of about 1,323.66 USD per ounce, after rising to a near 10-month high of 1,327.64 USD earlier.
The US gold futures rose by 0.5%to 1,329 USD per ounce.
A new round of talks between Beijing and the United States to resolve their trade dispute will take place in Washington later in the day, with follow-up sessions at a higher level in the course of the week. If there is progress in trade talks there will be increasing appetite for emerging-market currencies, and the US dollar will weaken. Thus, the US dollar will lose its safe-haven appeal, which will be supportive for the gold.
Also supporting gold prices is the US Federal Reserve’s dovish approach to monetary policy tightening, which reduces the cost of holding gold.
Gold prices have gained 3.3% so far this year on expectations the Fed will pause its cycle of interest rate hikes.
Meanwhile, the silver was little changed at 15.80 USD per ounce.
Gold price analysis
Gold prices edged lower through the Asian session on Tuesday and eroded a major part of the previous session’s up-move to a near-10 month high.
The precious metal stalled its recent positive momentum and for now, seems to have snapped three-consecutive days of winning streak amid some renewed US Dollar buying interest.
Gold is consolidating around 1,324.24 USD. Possibly, the pair may break the range to the upside and reach 1,332.22 USD, a break above which could lead to gain to the next resistance at 1,343 USD. However, if the instrument breaks this range to the downside, the price may start a new correction with the target at 1,316.00 USD.
Gold prices have inched up and consolidated above 1,325 USD. Softer economic prospects are likely to put some pressure on interest-bearing assets.
Any subsequent slide is likely to find immediate support near the 1,317 USD region and is closely followed by the 1,314 USD horizontal zone, below which the commodity is likely to accelerate the fall further towards 1,306 USD support area.
On the flip side, the 1,326-1,327 USD region now seems to have emerged as an immediate resistance, which if cleared set the stage for further appreciating move towards 1,332-1,333 USD supply zone.
Palladium price and demand analysis
Spot palladium, which reached a record high of 1,471 USD per ounce.
The deficit in the palladium market will widen dramatically this year as stricter emissions standards increase demand. The market is fundamentally strong. The ongoing deficit and autocatalyst producers saying they are not seeing broad-based substitution from palladium to platinum really reinforce the prevailing positive sentiment.
Both metals are primarily used by automakers in catalytic converters, but platinum is more heavily used in the diesel vehicles, which have fallen out of favor since the Volkswagen emissions-rigging scandal broke in 2015.
Unlike platinum, palladium has benefited from the switch away from diesel engines and expectations for growth in hybrid electric vehicles, which tend to be partly gasoline-powered.