Palladium prices rose on Tuesday as the dollar stabilized against most major rivals ahead of important US inflation data.

Investors await the US consumer prices data later this week to gather more clues on the likely path ahead for the Federal Reserve’s monetary policy. 

Palladium is used in cars, especially diesel cars to reduce exhaust fumes. 

However, increased demand on electric cars hurt demand on diesel cars, and in turn hurt palladium demand. 

Palladium prices suffered noticeable losses in 2023 due to lower demand on catalytic converters in cars, which rely on palladium. 

Palladium is a widely available mineral, with 0.015 parts in a million share of the earth’s crust, and it’s usually produced as a byproduct of refining copper and nickel. 

Palladium prices reached a peak of $3440 in March 2022 after the Russian invasion of Ukraine, which curtailed supplies. 

Since then, prices collapsed noticeably to below $1500 as demand on EV cars spike worldwide, threatening the existence of diesel cars and their palladium-based catalytic converters. 

Otherwise, the dollar index stabilized at 104.1 as of 17:33 GMT, with a session-high at 104.2, and a low at 103.8.

Palladium June futures rallied 3.1% as of 17:34 GMT to $1,083.5 an ounce. 

Global oil prices fell in European trade on Tuesday on track for the third profit in a row away from six-month highs amid active profit-taking, and ahead of initial US inventory data.

Israel withdrew its forces from Khan Yunis in Gaza, with the troop level in the zone becoming the lowest since the war started on October 7th. 

Prices

US crude fell 0.45% to $86.18 a barrel, with a session-high at $86.94. 

Brent fell 0.4% to $90.31 a barrel, with a session-high at $90.91. 

US crude lost 0.25% on Monday, the second loss in a row on active profit-taking off six-month highs at $87.59. 

Brent fell 0.35% yesterday on profit-taking off October 2023 high at $91.88. 

On average, oil prices rallied 4% last week, the fourth weekly profit in a row amid concerns about global supply disruptions. 

US Stocks 

The American Petroleum Institute is releasing data on US crude stocks later today, with inventories expected up 2.4 million barrels last week.

Cease-fire Talks 

Israel withdrew some of its troops from southern Gaza amid a new stage in the ceasefire negotiations. 

Both Israel and Hamas sent teams to Egypt to conduct new talks on a potential ceasefire ahead of the Eid Al-Fitr religious holiday. 

Oil Prices Outlook 

Goldman Sachs’ analysts expect Brent to remain below $100 a barrel, provided no new surprising geopolitical hits take place. 

Gold prices rose in European trade on Tuesday for the third straight session, hitting a record high above $2350 as US treasury yields slowed down. 

Now markets await important US inflation data in addition to the Federal Reserve’s last meeting’s minutes to look for fresh clues on the future of interest rates. 

Gold is steadily approaching the psychological level of $2400 amid strong investment demand by global central banks and investment funds. 

Prices 

Gold prices rose 0.75% today to $2356 an ounce, a record high, with a session-low at $2336. 

Gold prices rose 0.4% on Monday, the second profit in a row, marking a fresh record high on strong haven demand.

Haven Demand 

Massive investments are pouring into gold as investors seek safe havens amid mounting Middle East tensions.

Israel this week announced the withdrawal of some of its troops from southern Gaza to redeploy them in preparations for the Rafah ground attack. 

At the same time, the Islamic Republic of Iran is preparing for a counterattack against Israel after the latter's alleged attack on the Iranian consulate in Syria. 

US Yields

US 10-year treasury yields declined today by over 0.5% away from recent five-month highs at 4.462%, underpinning non-yielding assets. 

US Rates 

Following excellent US labor data last week, the odds of a Fed interest rate cut at the June policy meeting tumbled from 60% to 48%. 

Now traders expect two interest rate cuts totaling 50 basis points overall this week, down from 75 basis points in previous forecasts. 

Now investors await crucial US inflation data later this week, which could change the odds of future policy moves by the Fed. 

Gold Performance Projections

JPMorgan's analysts foresee gold prices hitting $2500 an ounce this year.

Goldman Sachs' analysts project a minimum price target of $2300 an ounce for this year, anticipating policy easing by the Federal Reserve.

The SPDR

Gold holdings at the SPDR Gold Trust rose 1.44 tonnes yesterday to a total of 827.85 tonnes. 

Oil prices declined on Monday but trimmed their losses in an attempt to steady the pace after last week’s gains.

Goldman Sachs’ analysts expect Brent prices to hold below $100 in 2024, as global supplies are expected to carry on with no additional major hits, with current geopolitical tensions already priced in.

Oil prices marked the fourth weekly profit in a row last week, the longest such streak of gains since August due to geopolitical tensions and lower supplies. 

On trading, Brent futures due in June fell 79 cents to $90.38 a barrel.

US crude futures due in May fell by 48 cents to $86.43 a barrel.