Platinum and palladium prices are largely depending on the auto markets of China and India.

This is because these two countries now drive the auto sales across the globe and with the increase in car sales, platinum and palladium demand is also expected to rise. Both these metals are used in catalytic converter applications in automobiles.

China's automobile sales surged 30.45 per cent year on year to 7.18 million units in the first half of the year, keeping the country the world's largest auto market.

On a month-on-month basis, though, auto sales dropped 5.25 per cent in June, even as on a year-on-year basis June auto sales advanced 13.97 per cent.

Auto production, meanwhile, jumped 44.37 percent year on year to 8.47 million units in the first half.

Even though June saw a fall, a rebound is likely in the fourth quarter, as people will wait until the last minute to buy a car before incentive measures like tax cuts and subsidies expire.

This means, auto makers will be making more cars in China, which in turn will lift the demand for palladium and platinum.

The Chinese government decided last month to extend an auto replacement subsidy program by six months until December 31 this year. The subsidy aims to help get highly polluting vehicles off the road and to stimulate automobile consumption.

Under the program, consumers who trade-in their used small- and medium-sized trucks and some mid-sized passenger vehicles for a new one receive a subsidy from 3,000 to 6,000 yuan.

By the end of May, the Chinese government had handed-out 1.7 billion yuan in subsidies for 127,000 vehicles trade-ins.

In India, carmakers are in no mood to slow down as sales continued to boom in June, riding on high domestic demand and new launches.

Tata Motors led the charge with a 63% jump in passenger car sales in June that helped it overtake Hyundai Motors as the second-largest player in the domestic market.

Maruti Suzuki, the country's largest carmaker, posted a lower-than-expected 18% growth in June.

South Korean carmaker Hyundai, which reported a 19% increase in its domestic sales, however, suffered a 22% drop in exports in June at 18,888 cars due to poor demand in Europe.

Maruti Suzuki, whose production was partly affected due to a weeklong factory shutdown for annual maintenance, however, recorded a 15% increase in exports. Tata Motors sold close to 28,000 passenger cars in June on rising volumes of small car Nano and doubling of sales of the Indigo range.

Utility vehicle maker Mahindra & Mahindra's sales rose 20% to 27,562 units in June over last year but its passenger vehicle sales (Scorpio, Bolero & Logan sedan) dropped 3% to 17,573 units partly due to factory maintenance shutdown.