Palladium Above $870 on Concerns over Supply Constraints
Palladium climbed for a 13th session on Wednesday to trade near its highest since 2001 on concerns over supply constraints in major producer South Africa, while strong demand for the metal from the auto industry also underpinned prices.
Gold inched up as the world’s top bullion fund saw a second straight day of inflows, even as markets awaited the minutes of the Federal Reserve’s June policy meeting to gauge the U.S. central bank’s outlook for the economy and interest rates.
Prices of platinum group metals (PGMs) have gotten a boost this year due to a five-month long strike in major producer South Africa. Though the strike ended last month, there are lingering supply concerns in the market.
“PGMs have some more upside because the market is not convinced producers can quickly ramp up output to pre-strike levels,” said a trader in Tokyo.
The trader also said another short strike at Impala Platinum’s Marula mine that ended on Tuesday and a widespread car industry strike underscored the fickle situation in South Africa, the top producer of platinum and the No. 2 producer of palladium.
Palladium rose 0.4 percent to $870.70 an ounce by 0324 GMT. It hit a 13-year high of $873.75 on Tuesday. Platinum rose 0.8 percent.
The metal, mainly used in autocatalysts, also got a boost from data last week that showed that U.S. auto sales hit an eight-year high in June.
Spot gold edged up 0.2 percent to $1,321.15 an ounce.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 2.09 tonnes to 800.28 tons on Tuesday, after gaining 1.8 tons on Monday.
Demand for gold was boosted by violence in the Middle East and Ukraine. Gold is often seen as a safe-haven asset compared with riskier assets such as equities.
Bullion investors were also awaiting the minutes of the Fed policy meeting later today for clues on the timing of a rate hike. A strong U.S. jobs report last week stoked fears of an earlier-than-expected rate hike in the world’s largest economy.
A hike would encourage investors to withdraw money from non-interest-bearing assets such as gold.
Source: CNBC
