Gold rises; platinum and palladium at multi-year lows

LONDON: Gold rose on Tuesday as the dollar weakened after soft US economic data, while platinum and palladium hit multi-year lows on oversupply and sluggish autocatalyst demand.
Platinum dipped to its lowest since January 2009 at $940.50 an ounce, while palladium hit a near three-year low of $586.30 an ounce.
Spot gold was up 0.5 percent at $1,091.06 an ounce by 1328 GMT, but still not far above the $1,077 it hit on July 24, its weakest level since February 2010.
“You can’t separate the price of platinum, palladium from the rest of the commodity complex, which is broadly under pressure,” Macquarie analyst Matthew Turner said.
The 19-commodity Thomson Reuters/Core Commodity CRB Index, a global price benchmark, sank to a 12-year low on Monday as fears about a hard economic landing in China and a global glut deepened.
“(More specifically) what has hit palladium is that projections of car sales into the future were relied on strong growth in China and emerging markets,” he added.
“But China is flatlining and many emerging markets are down double-digit percentages. The outlook now looks a lot worse than a year or so ago.”
Both metals, mainly used in catalysts to clean up vehicle exhaust emissions, were further pressured by a private survey on Monday that showed China’s factory activity shrank more than initially estimated in July.
The metals have also suffered from a sharp drop in gold prices, which they tend to track, over the past month on the back of a rising dollar and expectations for an increase in US interest rates.
A softer dollar on Tuesday helped relieve the pressure on gold. It was down 0.2 percent against a basket of currencies, pegged back by US factory activity and consumer spending data on Monday suggesting the world’s largest economy may have lost some momentum in the past two months.
Despite weaker data, economists believe the Federal Reserve could still be on course to lift rates this year. The next main data event is the release of US non-farm payrolls on Friday.
An improving labor market could strengthen the dollar further, indicating more price losses for non-interest bearing gold. The metal lost nearly 7 percent in July.
“In the run-up to the first Fed rate hike it is going to be difficult for gold to rally ... the metal has been in a four-year bear market already and we can’t see any sustained driver that would take prices higher,” Bank of America-Merrill Lynch analyst Michael Widmer said.
Spot silver rose 0.5 percent to $14.55 an ounce.