Implied benchmark borrowing costs dribble ever lower. The 10-year gilt yield fell through 0.55 per cent amid the Bank of England’s fresh largesse.
Meanwhile, the dollar’s latest rally seems to have stalled. This is a good environment for gold. By mid-session on Wednesday, the yellow metal was back above $1,350 an ounce and eyeing the two-year high of $1,375 hit last month.
Its rally has energised the whole precious metals sector. Silver is back above $20 an ounce and the platinum group metals are joining in the fun.
Palladium at one point on Wednesday was up 7.5 per cent to a 14-month high. Like platinum, it has rallied more than 30 per cent so far this year.
Data at the start of August showed investors had yet to start pushing big money into platinum and palladium-based exchange traded funds.
Perhaps this latest spurt in prices suggests the retail investor excitement that characterises a strong commodity rally is picking up steam.
Certainly, hedge funds are already taking note. US palladium futures data show that in just five weeks the speculative net-long positions have risen from a near 10-year low of just 2,400 contracts to 15,200 contracts.
Meanwhile, platinum sector fundamentals are supportive. Demand from car producers — particularly tied to robust sales in China — is underpinning prices while production in South Africa is struggling.
Some analysts see the palladium market in physical deficit for the fifth year in a row.
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