Platinum and palladium prices still consolidating

Despite growing risks of a significant deterioration in the world economy, reported car sales figures surprised to the upside in August. Automobile sales were robust in many states, most notably in the so-called BRIC nations (Brazil, Russia, India and China). However, neither platinum nor palladium were able to benefit from this news in recent days, although a large part of the demand for both precious metals comes from industrial end-users in the automotive sector.

The German precious metals trading group Heraeus reported that unit sales developed better than expected in many world regions in August. Despite the damage and uncertainty caused by Hurricane Irene, auto sales climbed by 8% in the United States. In Germany – Europe's biggest auto market – new car registrations rose by 18.3% to almost 240,000 in August. Although the situation in Europe´s interbank market is deteriorating rapidly, the region's banks have been providing enough fresh loans for vehicle purchases. Palladium and platinum are both strongly dependent on the development in the car sector because they are mainly used in the construction of catalyst systems.

Chinese vehicle sales in August underscored the fact that the country has become the biggest car market in the world. Sales of cars, buses and trucks increased 8.3% compared with the previous month. Chinese car sales dropped for the first time in July in comparison with June, leading to concerns among financial market investors of an impending slowdown of China´s economic growth rate. Unit sales climbed 4.2% year-on-year. Overall, automobile manufacturers sold 1.0952 million cars in China in August. Thus, the country continues to be a main supporter of the global economy with the automotive industry strongly tied to cycles of the world economy. The total number of vehicles sold reached 1.0723 million units in the United States in August.

Other BRIC countries such as Brazil, Russia and India reported growing sales numbers as well. Nevertheless, palladium and platinum seem to be stuck in a trading range at the moment. According to the Heraeus report, a break through the technically key level of $1,900 to $1,920 per troy ounce would be positive for the platinum price. Palladium will avoid further price setbacks if it manages to sat above the $710 to $725 range. Platinum long positions are rising in New York, but Tokyo suffered from profit taking and a reduction of platinum positions among investors.

No specific trend is observable in either the platinum or the palladium sector. For both precious metals much – if not all – will depend on new economic data that emerges in the coming weeks.