Palladium prices and related exchange traded fund are plunging, along with other precious metals, as traders dump dollar-denominated metals on Federal Reserve interest rate speculation ahead of the jobs report.
The ETFS Physical Palladium Shares (NYSEArca: PALL) fell 3.3% Thursday after declining 7.3% over the past week.
Palladium was the worst performing precious metal Thursday, falling 3.2% to $609 per ounce.
Precious metals as a group have been steadily weakening in anticipation that the Fed will raise interest rates in December. Traders are now looking to the Friday jobs report as a major factor in the Fed’s decision to raise benchmark interest rates for the first time in almost a decade, MarketWatch reports.
Friday’s nonfarm payrolls report is expected to reveal an increase of 177,000 jobs with unemployment hovering around 5.1%, according to economists’ forecasts.
Additionally, precious metals are being pressured from a strengthening U.S. dollar after Fed Chair Janet Yellen’s comments Wednesday hinted at a December interst rate lift-off, citing low unemployment, continued growth and faith in higher inflation, Reuters reported. The USD typically has an inverse relationship to precious metals.
“We see further downside potential for the palladium price in view of the currently negative investment demand and speculative positioning,” Commerzbank said in a note, according to Platts.