Palladium futures reached the highest price in more than three years and platinum touched a two-week high on concern supply will be restricted by a mine strike in South Africa. Gold rose to the highest in two weeks.
Palladium climbed 19 percent this year as mineworkers went on strike since January in South Africa, the biggest producer of platinum and second-largest for palladium. Talks ended without a resolution two days ago. Holdings in platinum- and palladium- backed exchange-traded products are at records, data compiled by Bloomberg show.
Producers have lost about 21.9 billion rand ($2 billion) in revenue, making it South Africa’s longest and costliest mining strike. Demand for platinum and palladium, which are mainly used in pollution-control devices in vehicles, will exceed supply for a third successive year, Johnson Matthey Plc data show.
The strike “is threatening to cause long-lasting damage to the industry,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote today in a report. “The crisis is starting to look desperate as more players wake up to the fact that existing stockpiles could be depleted very quickly should no agreement be reached going into” the third quarter, he said.
Palladium for September delivery gained 0.2 percent to $856.45 an ounce by 7:33 a.m. on the New York Mercantile Exchange. It touched $857.50, the highest since February 2011. Futures trading volume was 43 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. The metal for immediate delivery rose 0.3 percent to $857 in London, according to Bloomberg generic pricing.
Platinum for July delivery was 0.4 percent higher at $1,487.60 an ounce in New York. It reached $1,488.40, the highest since May 23.
The minister who led the latest round of failed talks said job cuts grow more likely as the dispute drags on. Investors hold a record 86.5 metric tons of platinum and an all-time high 91.8 tons of palladium in exchange-traded products backed by the metals, data compiled by Bloomberg show.
Gold fell to a four-month low on June 3. U.S. data due tomorrow may show retail sales rose in May, after a report last week showed employment exceeded its pre-recession peak, sending U.S. equities to a record.
Short gold holdings, or bets on a price drop, reached the highest since January in the week ended June 3, U.S. Commodity Futures Trading Commission data show. Bullion rose as much as 1.6 percent since then, halting declines last week at about $1,240 an ounce, partly as the European Central Bank became the first major central bank to take one of its main rates negative.
“The failure to break below $1,240 last week coupled with the ECB announcing fresh stimulus measures seem to be inducing bears to trim some of their bearish bets,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report. “We do not expect gold to gain much ground as long as equities in the U.S. are in an upward trajectory and U.S. data continue to keep coming good.”
Gold for August delivery rose 0.3 percent to $1,263.30 an ounce on the Comex in New York, after reaching $1,264.90, the highest since May 28. Silver for July delivery added 0.2 percent to $19.215 an ounce.
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