Palladium Notches 13-Year High on Supply Concerns

July 8, 2014

New York (July 8)  Palladium prices hit a new 13-year high on Tuesday, as the market faced potentially dwindling supplies of the metal in the aftermath of a miners' strike in South Africa.

Palladium for September delivery, the most actively traded contract, rose 0.5% to $872.90 a troy ounce, the highest closing price since February 2001 on the Comex division of the New York Mercantile Exchange.

Platinum, which is often mined together with palladium, closed up 0.1% to $1,496.50 a troy ounce.

Investors believe the two metals, which are used mainly as a component in car-exhaust filters, are in short supply after a strike by South African miners halted production at several mines for five months. South Africa is the world's largest producer of platinum and its second-largest palladium producer. Although the strikes ended in June, it will take several months for the mines to reach their former capacity.

Meanwhile, auto sales in the U.S., Europe and China are climbing. BMW AG was the latest car maker to report strong numbers, after the company said Tuesday that it had sold more cars than ever before in the first half of the year, helped by strong demand in China.

"It's going to be a while until everyone is back at work and producing, and inventories build up to previous levels," said Frank McGhee, head of precious metals at Integrated Broker Services. "The rally is starting to look a bit overdone, but that doesn't mean it can't continue."

Prices for platinum and palladium are up 9% and 24% this year, respectively.

In other markets, gold prices were little changed, as investors weighed a stronger U.S. economy against conflicts in Ukraine, Israel and Iraq. Some investors use gold as a hedge against political and economic uncertainty.

Gold for August delivery, the most actively traded contract, fell 50 cents to end New York trade at $1,316.50 a troy ounce. The contract traded in a range between $1,314.30 to $1,325.70 an ounce.

Source:  WSJ

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