NEW YORK (Commodity Online): One of the major precious metals which is riding the auto demand wave is Palladium. With auto sales soaring in China and India, Palladium prices are set to cross $500 an ounce in the coming days.

Palladium is used in automotive pollution-control devices and for jewelry.

According to market analysts, palladium will soon go above $500 an ounce. Prices last traded over $500 in March 2008. Palladium climbed to $480 on March 8, the highest price since March 2008. The metal, which traded at $472.15 in London, is up 16 per cent this year after more than doubling in 2009.

With the prices set to soar, palladium is an appealing investment because future jewellery and industrial demand will be strong.

Jewelry will be an important part of Palladium demand, its industrial use is diverse and sustainable. Investment demand helped push spot palladium to $480 an ounce late last week.

Palladium has also been boosted by expectations of economic recovery and worries about supplies from South Africa.

Demand has recovered because of cash-for-clunkers incentive schemes, initiated by some governments to boost demand and confidence.

Sister-metal Platinum is also used in converters. High platinum prices have accelerated the search for technology that uses less platinum and more palladium.

China’s passenger car sales in February jumped 55 per cent from a year earlier as policy incentives lured buyers into showrooms.

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