Platinum group metals (PGMs) showed strong performance today, with platinum and palladium leading gains after gold and silver had previously rallied. The platinum futures contract hit its daily limit-up, closing at 482.40 yuan/gram, while the palladium futures contract surged over 4% to 407.60 yuan/gram. What is driving the rally in platinum and palladium, and how closely are they linked to gold’s movements?

**Fundamental Analysis:** 1. **Macro and Geopolitical Sentiment Support:** - The Fed’s recent rate cuts have not fully reversed market expectations of continued easing. - Persistent geopolitical risks have fueled demand for precious metals, with PGMs gaining momentum after gold and silver’s strong performance.

2. **Tight Physical Supply:** - London platinum and palladium lease rates have rebounded, signaling tighter liquidity in the spot market. - Palladium ETF holdings continue to rise, further tightening supply and reinforcing price momentum.

3. **High Basis and Spreads:** - Both platinum and palladium basis and intermarket spreads remain elevated, attracting arbitrage flows that push spot prices higher, subsequently lifting futures prices.

Investors should monitor potential volatility risks and watch for profit-taking if spreads narrow.

**How Correlated Are Platinum and Palladium with Gold?** The correlation primarily stems from their shared classification as precious metals, where macroeconomic or geopolitical sentiment can drive broad sector movements. For instance, amid Fed rate cuts and geopolitical tensions, bullish sentiment often extends across the entire precious metals complex.

However, key differences exist: - **Financial Attributes:** Gold > Platinum > Palladium - **Industrial Attributes:** Palladium > Platinum > Gold

Gold typically outperforms as a safe-haven asset during uncertainty, while platinum and palladium benefit from industrial demand during economic recoveries. Investors may consider PGMs as a complement to gold allocations to enhance portfolio flexibility, though with higher volatility risks.

**Recent Price Trends (Gold vs. Platinum vs. Palladium)** Data source: Tonghuashun iFinD

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