(Updates prices)
* British PM May's government wins no confidence vote
* GRAPHIC-Gold vs currencies: By Arijit BoseBENGALURU, Jan 16 (Reuters) - Palladium rose to a recordhigh on Wednesday on increasing demand and lower supply of themetal used in auto catalysts, while gold gained on expectationsof a pause in the U.S. Federal Reserve's rate-hiking cycle.
Palladium jumped to an all-time high of $1,358.50 anounce, and was last up 3 percent at $1,358.George Gero, managing director at RBC Wealth Management,noted high demand from "the automobile industry using more andmore of palladium" and lower supply were pushing prices higher.
The price of palladium, used mainly in emissions-reducingcatalysts for vehicles, has risen by more than 60 percent from atrough in mid-August last year, and overtook gold for the firsttime in 16 years early in December 2018. The move higher on Wednesday could also be attributed toshort covering, Michael Matousek, head trader at U.S. GlobalInvestors, said.A sustained period of record palladium automotive demand,with last year's estimate of 8.5 million ounces, coupled withconstrained mine production growth has resulted in demandoutpacing supply over much of this decade, Metals Focus said ina note dated Tuesday.
"In the long run, we believe that palladium will continue tobenefit from exceptionally strong supply/demand, resulting inyet higher prices. However, in the near future, we believe thatpalladium is due a correction."Spot gold rose 0.3 percent to $1,292.51 per ounce at3:42 pm EST (2042 GMT). U.S. gold futures settled 0.4percent higher to $1,293.80 per ounce."The macro environment still looks very positive for gold,given we expect the dollar to weaken and the Fed unlikely tostart hiking rates until the second half of the year," said SukiCooper, precious metals analyst at Standard Chartered Bank.Investors remained concerned as softer data from across theworld heightened fears that the global economy is slowing,adding to the appeal for gold, considered a hedge againsteconomic and political uncertainty, analysts said.Risks to the U.S. recovery, including a partial governmentshutdown, have broadened hawkish calls among Federal Reserveofficials to be patient before raising interest rates again.Gold tends to gain on expectations of lower interest rates,as they reduce the opportunity cost of holding non-yieldingbullion.
This provided gold some underlying support despite a firmerdollar and global equities.Meanwhile, British Prime Minister Theresa May's governmentwon a vote of no confidence on Wednesday, with 325 votes versus306, meaning that May will now press ahead to find a consensusover how to proceed with Britain's departure from the EuropeanUnion, after her proposed deal was rejected by parliament. Platinum gained 1.5 percent to $805 an ounce, whilesilver rose 0.1 percent to $15.59.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^GRAPHIC-Gold vs currencies ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Arijit Bose and Arpan Varghese in Bengaluru;Editing by Susan Thomas and James Dalgleish)
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