Fool's Gold Report: Palladium Shines As Gold, Silver End Flat After Turbulence

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Gold gets most of the attention in the precious-metals group, but on Monday, it was palladium's day to shine. The platinum-group metals both outperformed gold and silver, with palladium gaining $11 to $737 per ounce while platinum climbed $8 to $1,413 per ounce. By contrast, gold finished flat at $1,238 per ounce, although SPDR Gold Shares managed to keep its winning streak alive by climbing 0.2% today. Silver prices gained just a few pennies per ounce to $20.17, leaving iShares Silver Trust flat on the day.

The day in gold was anything but boring, though, as traders experienced a wild swing in February gold futures that resulted from a trade of 4,200 futures contracts. Those contracts controlled 420,000 ounces of gold worth roughly $520 million at current prices, and prices fell about $30 per ounce and triggered a short-term trading halt. The incident brought various comments from market participants, with some alleging outright manipulation while others pointed to the possibility of ordinary trades from large players liquidating positions quickly.

Mining stocks generally had a decent day, with Barrick Gold posting gains of more than 1%. Gold's modest strength in early 2014 has turned some heads among investors, most of whom had expected continued downward pressure after 2013's plunging prices.

But auto sales likely paved the way for strength in platinum and palladium, which are materials that are used in catalytic converters. Ford reported this morning that December sales in China jumped 35%, bringing its gains for the year in China to 49% and outpacing its Japanese rivals by a wide margin. Combined with its 11% gain in U.S. sales during 2013, last year was a great one for autos, and that could add to palladium and platinum demand for the foreseeable future.

Nevertheless, it'll be interesting to see if futures regulators look more closely at the turbulence in gold prices today. With the yellow metal at an important inflection point, the stakes are especially high for traders hoping for price moves in either direction.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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