Palladium Falls to Two-Week Low on Russia-Ukraine Talks

New York (Sept 3)  Palladium declined to an almost two-week low in New York after Ukrainian President Petro Poroshenko said he agreed a cease-fire with Russian counterpart Vladimir Putin. Gold rose after reaching a two-month low.

The two leaders largely agreed on steps toward easing the conflict in Ukraine, Putin’s spokesman Dmitry Peskov said. A statement on Poroshenko’s website said an agreement had been reached on a “cease-fire regime.” Palladium climbed to a 13-year high of $913 an ounce this week as Russia, the top supplier of the metal, faced further sanctions.

The metal has advanced 22 percent this year as usage rose in catalytic converters, which curb harmful emissions in cars, and as a five-month mine strike that ended in June in South Africa, the second-biggest producer, reduced supplies. While Russia retaliated against previous sanctions by banning imports of some food products, there have been no metal-related restrictions yet. Putin didn’t endorse a permanent cease-fire as Russia isn’t a party to the fighting, Peskov said.

“This morning’s news flow just increases uncertainty,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. News on an agreement should cause prices to decline, though the metal’s “fundamentals are robust” and this week’s drop may be a buying opportunity, he said.

Palladium for December delivery fell 0.7 percent to $877.50 an ounce by 7:45 a.m. on the New York Mercantile Exchange. It slid as much as 1.5 percent earlier today to $870.05, the lowest since Aug. 21. The metal for immediate delivery slid 0.6 percent to $876.63 in London, according to Bloomberg generic pricing.

Trading Volume

Futures trading volume was more than double the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

Platinum for October delivery was 0.1 percent higher at $1,410 an ounce in New York, and touched $1,404, the lowest since April 24. The metal is also mostly used in catalytic converters. Platinum and palladium are both heading for a third straight annual supply shortage, according to Johnson Matthey Plc.

Gold for December delivery rose 0.4 percent to $1,269.80 an ounce on the Comex in New York, after reaching $1,261.90, the lowest since June 17. It slid 1.7 percent yesterday, the most in seven weeks, as a U.S. manufacturing gauge climbed to the highest since March 2011. That helped strengthen the dollar, which reached a seven-month high against 10 major currencies today, before declining.

Bullion futures’ 14-day relative-strength index fell to an almost three-month low of 34.4 yesterday, nearing the level of 30 that signals to some traders who study technical charts that prices may rebound. It was at 37.8 today.

“Physical buyers take a while to show their hands after price drops,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. “The dollar continued to strengthen” yesterday and bullion’s drop then was accelerated by technical-related selling, he said.

Silver for December delivery increased 0.4 percent to $19.23 an ounce.

Source:  Bloomberg