Monday, September 1, 2014

Palladium Climbs to 13-Year High as Gold Little Changed

By Nicholas Larkin and Glenys Sim

Palladium rose to the highest level in more than 13 years as prospects of further sanctions against Russia increased concern that supplies from the largest producer may be disrupted. Gold was little changed.

Russian President Vladimir Putin suggested “statehood” for battle-torn southeastern Ukraine, as European Union governments agreed to impose new sanctions on Russia if the conflict worsens. Russia has retaliated against previous sanctions by banning imports of some food products. There have been no metal-related restrictions yet.

Palladium has climbed 27 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. The metal capped a seventh month of gains in August that was the longest such run since January 2011.

“The threat of additional sanctions against Russia has rattled a commodity where demand” is increasing, Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said today by e-mail. While prices may fall back toward the “psychological” level of $900 an ounce in the short term, “the risk of a deeper correction seems low at this stage,” he said.

Palladium for immediate delivery climbed 0.6 percent to $910.25 an ounce by 12:29 p.m. in London, according to Bloomberg generic pricing. It reached $911.46, the highest since February 2001. The metal for December delivery on the New York Mercantile Exchange was 0.3 percent higher at $912.25.

Trading Volume

Futures trading volume was 26 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Floor trading on U.S. markets was closed today for the Labor Day holiday.

Platinum lost 0.2 percent to $1,421.10 an ounce in London. 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.

While EU leaders disagreed about possible military assistance to Ukraine, they gave the European Commission a week to deliver proposals for sanctions that may target Russia’s energy and finance industries.

Gold was little changed at $1,287.24 an ounce in London. It reached a one-week high of $1,296.61 on Aug. 28, rebounding from a two-month low of $1,273.14 set Aug. 21. Bullion gained 0.5 percent last week even as the dollar climbed to the highest level in almost seven months against 10 major currencies. The U.S. Labor Department will release its latest monthly jobs report on Sept. 5.

“Gold prices have been pulled higher by geopolitical tensions but pushed lower by a stronger dollar,” Barclays Plc wrote in a report today. “Market focus will turn to the U.S. unemployment report this week, where recent stronger-than-expected data have capped upward momentum in gold.”

Silver was little changed at $19.4733 an ounce.

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