Palladium at Highest Since 2011; ETP Holdings Near Record

May 21, 2014

London (May 21)  Palladium reached the highest price since 2011 and investors are holding a near-record amount in funds backed by the metal on concern that supplies may be further restricted. Gold traded little changed in London.

Palladium exchange-traded-product assets reached a record 86 metric tons on May 19 and are valued today at about $2.29 billion, data compiled by Bloomberg show. Prices rose 16 percent this year as mine workers downed tools since January in South Africa, the second-largest producer. The three biggest platinum-mining companies and the main union at their operations in the country will today start mediation to try to end the strike.

Supplies are being restrained and carmakers are using more palladium and platinum in pollution control devices. Shortages of the metals will be the most in more than three decades this year, Johnson Matthey Plc said yesterday. The U.S. and the European Union have vowed to tighten sanctions on Russia, the top palladium supplier, if it disrupts Ukraine’s May 25 election. Russia prepared retaliatory measures in response to possible wider sanctions, said Prime Minister Dmitry Medvedev.

“There are supply-side concerns with the strike action still ongoing in South Africa,” James Moore, an analyst at FastMarkets Ltd. in London, said today by phone. “We’ve still got the Russian situation bubbling away in the background.”

Palladium for immediate delivery gained 0.3 percent to $828 an ounce by 10:34 a.m. in London, according to Bloomberg generic pricing. It touched $830, the highest since Aug. 2, 2011. The metal for June delivery on the New York Mercantile Exchange added 0.3 percent to $828.20. 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 Price

Platinum rose 0.7 percent to $1,478.46 an ounce in London. South Africa is the biggest producer of the metal. Holdings in platinum ETPs reached an all-time high on May 19 and palladium assets were little changed yesterday, data compiled by Bloomberg show.

The U.S. said there was as yet no evidence that Russian forces in regions bordering Ukraine have started a withdrawal announced by President Vladimir Putin two days ago. Russian state television said yesterday soldiers in three regions had started to return to their bases.

Gold gained 7.5 percent this year, partly as the standoff over Ukraine spurred demand for a haven. Prices slumped 28 percent last year on expectations of less U.S. stimulus as the economy strengthens. The Federal Reserve will today release minutes from its last meeting, when bond-buying was pared for a fourth time.

“Gold remains stuck in a range as investors look ahead to minutes from the Fed,” said Mark To, head of research at Wing Fung Financial Group, a Hong Kong-based trader and refiner.

Bullion lost 0.2 percent to $1,291.94 an ounce in London. Holdings in gold-backed ETPs fell 2.9 tons to 1,720.1 tons yesterday, the lowest since October 2009, data compiled by Bloomberg show. Assets in the SPDR Gold Trust, the largest gold product, dropped to the lowest since December 2008.

Silver was little changed at $19.4241 an ounce.

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