Palladium breaches $1,550/oz as supply concerns grow; gold steadies

PALLADIUM broke past $1,550 an ounce for the first time on Tuesday on the back of intensifying supply deficit, while gold steadied after US Federal Reserve Chairman Jerome Powell reiterated the central bank’s patient stance in further rate hikes.

Spot palladium soared to $1,565.09 per ounce earlier in the day, and was up 0.9% at $1,555 by 2:25 p.m. EST (1925 GMT).

“Palladium is up based on the fact that there are 15 mining firms in South Africa, that could go on strike this week,” Bob Haberkorn, senior market strategist at RJO Futures.

The news of South African mining firms receiving notices of strikes to be held next week aggravated supply concerns in an already tight market, with prices soaring more than 23% so far this year.

The world’s largest palladium producer, Norilsk Nickel, on Tuesday said tighter emissions regulations in all major markets and flattish primary supply would widen the autocatalyst metal’s deficit in 2019.

“There are increased talks that palladium is entering into the bubble territory because of the relentless rally that we have seen,” Saxo Bank analyst Ole Hansen said. “Those who are long are tempted to take profits while we potentially may see a few attempts to sell some shorts in the market.”

Elsewhere, spot gold was steady at $1,327.41 per ounce, while US gold futures settled down about 0.1% at $1,328.50 per ounce.

While Mr. Powell reiterated the rhetoric of “patience” about the future of interest rate hikes at a US Senate Banking Committee hearing, stronger-than-expected consumer confidence data has kept gold pressured, analysts said.

Mr. Powell reaffirmed the policy shift made by the Fed last month, telling a Senate Banking Committee hearing that “crosscurrents and conflicting signals” had weakened the case for further rate increases and made an otherwise positive economic outlook less certain.

“People wanted to take something from Powell’s statement but there just wasn’t anything there that was definitive enough to move gold today,” said Bill O’Neill, partner at Logic Advisors, adding, “in the long term his statements are supportive of the market because they indicate no rate hike.”

Lower interest rates reduce the opportunity cost of holding non-interest bearing gold and weigh on the dollar.

Among other precious metals, silver edged down by 0.1% to $15.88 per ounce, while platinum gained 0.6% to $854, having touched $858, its highest since early November last year. —