Palladium Rises Toward 13-Year High as Gold Is Little Changed

Aug 15, 2014 4:31 am ET

Aug. 15 (Bloomberg) -- Palladium rose toward a 13-year high in the longest run of gains in a month in London on concern demand from car companies and restricted output will add to supply shortages. Gold was little changed.

Palladium, mostly used in catalytic converters in vehicles alongside platinum, climbed 24 percent this year as car companies used more and as supply was cut by a mine strike that ended in June in South Africa, the second-biggest producer. Prices also rose as tension over Ukraine led to the U.S. and European Union slapping sanctions on Russia, the top supplier.

There have been no metal-related sanctions yet. While Russia proposed a cease-fire for humanitarian aid deliveries to war-torn parts of southeastern Ukraine as a convoy of aid trucks from Moscow waited near the border with rebel-held areas, there were news reports of armored personnel vehicles seen crossing into Ukraine. China’s passenger-vehicle sales rose 11.5 percent in July after a 14 percent gain in June, data showed Aug. 8.

“A commodity where almost all the supply originates from just two sources can easily create supply worries, not least in this case where we are dealing with Russia and South Africa,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said today by e-mail. There’s “continued demand from the automotive sector.”

Palladium for immediate delivery rose 0.3 percent to $885.50 an ounce by 9:13 a.m. in London, according to Bloomberg generic pricing. Prices, up for an eighth day in the longest run since July 9, reached a 13-year high of $889.75 on July 17. The metal for September delivery on the New York Mercantile Exchange was 0.1 percent higher at $887.

Trading Volume

Futures trading volume was about average for the past 100 days for this time of day, data compiled by Bloomberg showed. Prices gained 2.9 percent this week in London. Platinum fell 0.4 percent to $1,460.66 an ounce in London.

Unrest in Ukraine and the Middle East helped gold rise 9.3 percent this year. Israel and Gaza Strip militants entered the second day of a truce, after rocket fire from Gaza at Israel triggered Israeli air strikes early yesterday.

Gold for immediate delivery was little changed at $1,313.18 an ounce in London. Prices which rose 0.3 percent this week, reached $1,322.76 on Aug. 8, the highest since July 18.

Paulson & Co., the largest investor in the SPDR Gold Trust, the biggest exchange-traded product backed by bullion, maintained its holdings in the fund for a fourth quarter in the three months ended June 30, according to a filing yesterday. Global bullion ETP holdings fell 1.9 percent this year, data compiled by Bloomberg show.

Silver added 0.1 percent to $19.9110 an ounce in London.

--With assistance from Glenys Sim in Singapore.