Palladium prices and commodity-related exchange traded fund surged to over a two-month high Wednesday after China pledged drastic measures to cut emissions and confidence in diesel engine vehicles was tainted in the wake of the Volkswagen fallout.
The ETFS Physical Palladium Shares (NYSEArca: PALL) rose 5.8% Wednesday, jumping over its 50-day simple moving average. PALL has increased 1.3% over the past week and 0.7% in the past month, but the fund is still down 24.1% year-to-date.
The precious metal, which is used in pollution-control devices for automobiles, strengthened Wednesday after China stated it will accelerate construction of electric car charging facilities, reports Luzi-Ann Javier for Bloomberg.
“They want to start doing more electric cars,” Peter Thomas, a senior vice president for metals at Zaner Group LLC, told Bloomberg. “If they’re speeding it up, it would make sense for palladium to go up.”
The palladium spot price gained 5.8% Wednesday to $645.2 per ounce, the highest price since mid-July.
Moreover, palladium is benefiting as an alternative to platinum after Volkswagen revealed it was fudging the data on its emissions data, which has put greater scrutiny on all diesel engines. [Bug In The Ointment: VW’s Deception Stalls Car ETF]
Platinum, which is widely used in diesel car engines, dipped below $900 per ounce for the first time since the financial crisis in response to the emissions scandal at Volkswagen, reports Ese Erheriene for the Wall Street Journal.