Platinum, Palladium Pull Back Ahead of Long Weekend

New York (May 23)  Platinum and palladium finished lower Friday as the prospect of a long weekend in the U.S. and the U.K., two of the world's precious metals trading hubs, prompted some investors to pare their holdings and lock in recent gains.

Platinum for July delivery, the most actively traded contract, fell $20.30, or 1.4%, to settle at $1,472.80 a troy ounce on the New York Mercantile Exchange. June-delivery palladium fell $5, or 0.6%, to settle at $831.45 a troy ounce on the Nymex.

Palladium had rallied to a three-year high on Thursday, while platinum had touched an eight-month high, after a person was killed on Thursday in South Africa in connection with an 18-week long strike that has kept platinum mining at a standstill. The renewed violence fanned worries about supply of both metals. South Africa supplies about 80% of the world's platinum and roughly a third of its palladium.

On Friday, prices of both platinum and palladium retreated as some investors opted to cash in their profits ahead of a three-day weekend, brokers said.

"Platinum has been a leader and this is just a bit of profit-taking," said Rich Ilczyszyn, chief market strategist with iiTrader, a Chicago-based futures brokerage. Precious metals markets in the U.K. and the U.S. will be closed Monday for public holidays.

Still, the pullback in platinum and palladium is likely temporary as the outlook for supplies remains tight. The strike has cost South Africa's platinum industry roughly $1.8 billion in lost revenue. A new round of government-mediated talks between mining companies and union leaders was announced this week, though a resolution continues to evade the parties.

"A lot of people who thought this strike would be mitigated realize it won't happen as quickly as they expected," said Adam Klopfenstein, a senior market strategist with Archer Financial Services in Chicago. "And even if they do come to some agreement, it will take some time before platinum is coming out of the ground again."

Meanwhile, gold prices also drifted lower Friday as a stronger dollar dimmed investor appetite. Gold is traded in dollars and becomes more expensive for foreign buyers when the greenback strengthens.

The most actively traded contract, for June delivery, fell $3.30, or 0.3%, to settle at $1,291.70 a troy ounce on the Comex division of the Nymex.