Today’s AM gold fix was $1,333.50, €971.94 and £799.84 per ounce. Yesterday’s AM fix was $1,339.50, €973.90 and £802.87 per ounce.
Gold fell $16.30 or 1.21% yesterday to $1,335.10. Silver dropped $0.24 or 1.12% at $21.19 per oz.
Palladium, 1994 to March 2014 - (Bloomberg)
Gold traded below its highest level in more than four months as tension between Ukraine and Russia eased leading to traders taking profits on gold.
Palladium climbed for a fifth day and jumped to an 11-month high. Palladium for June delivery rose 0.7% to $769 per oz., the highest for the most active contract since Aug. 15. Palladium has gained 5.5% during the last five days of the crisis and is up 7.4% year to date.
According to Bloomberg Industries analysts Kenneth Hoffman & Oliver Nugent, “Any sanctions imposed by the EU and the U.S. on the export of Russian palladium group metals would create a serious supply shortage that may be difficult for industries to replace.”
This year will show the third consecutive deficit year in global palladium supply, according to a BI survey of analysts. Russia provided 44% of global palladium supply and 13.6% of platinum last year, according to Johnson Matthey.
According to BI, “a pick-up in China's demand for platinum group metals may offset any sanctions imposed on Russia by the U.S. and European Union. An increase of 26% sequentially in platinum imports by China in November suggests that domestic supplies are depleting. Russia has typically provided about 30% of China's palladium imports and China may need to increase imports from the country as labor disputes in South African mines continue to affect production.”
Tensions have eased but the crisis is far from over. Russia is the world's largest energy producer and Ukraine hosts a network of strategic pipelines that carry more than half of Russia's gas exports to the EU. So, any conflict between the two countries threatens oil and gas supplies and puts Europe's energy security and indeed economic recovery at risk.
Russia and Ukraine together account for roughly 40% of global grain exports, mainly wheat. Russia is also a large corn exporter and a conflict would likely lead to food and energy price inflation.
Ore deposits of palladium are rare and are mostly located in Russia and South Africa. Russian resource nationalism, as has been seen with natural gas, could lead to supply disruptions and to palladium going higher in the coming months. Some analysts believe palladium may be in deficit for most of the next decade as Russia depletes stockpiles. Also, industrial uses and investment demand for the precious metal looks set to increase.