Palladium falls to one-month low as S.Africa wage deal looks to be in sight

Last Updated: Fri, Jun 13, 2014 12:55 hrs

Palladium fell to a one-month low on Friday, adding to the previous session's sharp fall, as investors awaited confirmation that South Africa's longest ever mining strike would end soon.

Platinum, however, inched higher as its near 3 percent loss on Thursday - its biggest daily drop since June 2013 - was sufficient to spur some buying, traders said.

The leader of South Africa's AMCU union said that a wage deal was imminent and he hoped to meet with producers Lonmin , Anglo American Platinum and Impala Platinum on Friday or over the weekend to relay the response of his members to their offer.

Palladium was down 1.5 percent per ounce to $817.70 by 1201 GMT, having touched its lowest since May 16 earlier. It plunged 4 percent on Thursday, just a day after rallying to a 13-1/2 year high on signs of a deadlock in the wage talks and on demand from the auto sector, which accounts for more 70 percent of total offtake.

Platinum rose $3.75 an ounce to $1,438.90.

South Africa's crippling five-month strike in the platinum belt has lifted palladium prices by more than 15 percent this year, outpacing gains in platinum which is up just six percent.

Analysts' estimates put platinum output losses at 1.1 million ounces and palladium at around 600,000 ounces.

"If we see the workers agree to the wage deal there could be some additional weakness but it still leaves a market where supply has been disrupted for several months," Saxo Bank senior manager Ole Hansen said.

"Overall there will be some long-term buyers that will look to pick the metals up at any major correction."


Gold steadied, gaining some support from lower equities after the Bank of England raised the prospect of a rate hike, while violence in Iraq could burnish the metal's appeal as an insurance against risk.

The United States is not ruling out air strikes to assist the Iraqi government fight a growing radical Islamist insurgency, President Barack Obama said on Thursday, raising the possibility of U.S. military intervention.

Gold tends to have an inverse relationship with equity markets, with investors seeking refuge from riskier assets in times of political or financial troubles.

Gold was up 0.1 percent at $1,273.30 an ounce. The metal rose one percent on Thursday after weaker-than-expected U.S. retail sales and jobless claims data tempered economic optimism.

U.S. gold futures for August delivery stood at $1,273.60, unchanged on the day.

On the physical side, premiums for gold bars in Singapore, a centre for bullion trading in Southeast Asia, were steady at 80 cents to $1.20 an ounce to spot London prices.

Premiums in Hong Kong were also quoted at 80 U.S. cents to $1.20 to spot London prices, while in Tokyo, gold bars were offered at discounts of 25 cents to on par.

Silver rose 0.4 percent to $19.57 an ounce after hitting a 2-1/2 week high of $19.63.

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