FxWirePro: Expect demand for palladium as diesel vehicles to have further adverse hit on platinum prices

As per the statistics, Germany consumes 1/3^rd of the total global consumption of platinum. World's largest automaker from Germany has been negative news.

The price of Platinum is now adversely proportional to the palladium, both precious metals haven't been acting much like sister metals anymore in the back of the biggest diesel vehicles manufacturer Volkswagen scandal, even though both are widely used in vehicle production, but there is a good reason for that.

Both metals are used in catalytic converters, which help control harmful emissions coming from car exhausts, but "platinum is notably used for diesel vehicles and palladium for gasoline vehicles".

The VW scandal has contributed to negative sentiment for diesel vehicles, probably benefiting gasoline, which in turn prop up the demand factor for palladium.

As a result we forecast platinum prices to slump further in the months to come, probably back again to test USD 910 levels. Currently, this precious metal could hold earlier gains of 920, it has shown dips back to 918 levels.

The auto industry accounted for about 40% of global platinum demand and 69% of global palladium demand in 2014, according to data from Johnson Mathey PLC, which makes platinum and palladium chemical-coatings for car companies.

The most actively traded platinum futures contract, for October delivery, fell $5.10, or 0.5%, to settle at $932.40 a troy ounce on the New York Mercantile Exchange. This was the lowest close since January 2009. Meanwhile, palladium futures for December delivery surged 5.7% to a two-month high of $645.70 a troy ounce.