By John McDonald
As more investors give up on their hopes of a trade deal between the United States and China, those holding gold or palladium in their portfolios can happily start admiring the silver lining to the tariff tensions.
Reuters reports this week that palladium is, once again, looking better than ever with an all-time high on Monday.
Those holding yellow metal can also look forward optimistically as gold futures are rising higher and appear poised to break through the $1,500 “ceiling” this bull run has experienced so far.
“It’s a reassessment of the Chinese trade deal, the Brexit, and of what the Federal Reserve may or may not do going forward,” said George Gero, managing director at RBC Wealth Management, while commenting on the precious metals’ trends.
He predicted gold will continue to shy away from a “major rally” as long as the dollar index remains up, however. Gero said this is “because international investors are buying U.S. securities using dollars.”
Rumors of Trade Talks Won’t Slow Gold
Although China recently made headlines after rumors emerged that the country had expressed interest in holding more talks before the end of October in order to “hammer out the details” (as Bloomberg described it) of a potential agreement, a total lack of named sources and the current administration’s somewhat unpredictable negotiating style has prevented the topic from stalling the gold run in any significant way.
Furthermore, many of the rumors are contradictory, with one source claiming Beijing might send a delegation to finalize a written deal at the Asia-Pacific Economic Cooperation Summit next month, while another claimed President Trump might stall a planned and much-touted tariff hike this December.
U.S. Treasury Secretary Steve Mnuchin seemed to dismiss that particular rumor, however, when he recently noted the December 15 deadline for an additional round of tariffs on Chinese goods would likely remain intact.
Overall, the uncertainty has been good for gold-heavy portfolios, which benefit when investors feel the overall market is somewhat uncertain.
“Overall bullish trend [for gold] is intact,” said Edward Moya, senior market analyst at OANDA. “There have just been a plethora or reasons why you are seeing demand from all over the world,” he added.
Palladium Likely to Remain in a Growth Pattern
While investors look to safe-haven assets like gold to assuage concerns over global economic uncertainty, those who prefer to leverage capital in the auto industry can sit back on their laurels if they invested in auto-catalyst palladium.
Although palladium is technically a byproduct of nickel, copper, and platinum mining, its use in motor vehicles as a catalyst for reducing pollution in exhaust makes it extremely valuable, as do uses in electronics.
Most analysts agree palladium is likely to remain in a bull run because quantities are limited, designated mining operations are few, and the need for the metal is growing all the time.