Palladium climbs to 13-year high as gold declines

New York (Aug 18)  Palladium climbed to a 13-year high in the longest run of gains in more than a month in New York on concern supply will lag demand and add to shortages. Gold fell.

Palladium, mostly used in catalytic converters in cars alongside platinum, advanced 25 percent this year as auto companies used more and as supply was cut by a mine strike that ended in June in South Africa, the second-biggest producer. Prices also rose as tension over Ukraine led to the U.S. and European Union slapping sanctions on Russia, the top supplier.

There have been no sanctions yet on palladium, which is heading for a third annual supply shortfall. Russia’s Foreign Minister Sergei Lavrov said talks on the conflict in Ukraine haven’t produced a resolution, with the only progress made being on the passage of humanitarian aid. He expects truckloads of Russian aid for the Luhansk region to be delivered soon.

“Palladium has very good fundamentals,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. There are “potential threats on Russian exports. The after- effects of the South African strike means output will suffer. There’s a sense that China and U.S. car sales remain buoyant.”

Palladium for September delivery rose 0.8 percent to $901.25 an ounce by 7:29 a.m. on the New York Mercantile Exchange. Prices, up for a ninth day in the longest run since July 8, reached $902.75, the highest since February 2001. The metal for immediate delivery gained 0.7 percent to $900.75 in London, according to Bloomberg generic pricing.

Trading Volume

Futures trading volume was 41 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Platinum for October delivery was 0.2 percent lower at $1,454.10 an ounce in New York.

European leaders are pushing to halt the conflict that’s fractured Ukraine since Russia annexed Crimea in March. Russia has retaliated against sanctions by banning imports of some products from the EU, U.S., Norway and Canada.

Tensions helped gold rise 8.3 percent this year, even as the Federal Reserve curbed stimulus measures as the economy strengthened. The central bank will release minutes of its latest meeting on Aug. 20 and Fed Chair Janet Yellen is due to deliver a speech on Aug. 22 in Jackson Hole, Wyoming.

“Market participants will likely be focusing on the FOMC meeting minutes due to be released on Wednesday and the Fed’s Jackson Hole symposium,” UBS AG analysts wrote in a report today. “Much of the attention will be on Fed Chair Yellen’s keynote speech.”

Gold for December delivery fell 0.3 percent to $1,302.20 an ounce on the Comex in New York. It reached $1,293 on Aug. 15, the lowest since Aug. 6. Silver for September delivery added 0.1 percent to $19.55 an ounce, after reaching a two-month low of $19.47


Source: Bloomberg