SINGAPORE — Palladium fell from its highest level in more than three years on yesterday as investors reaped profits, but the metal used in jewellery and auto catalysts remains underpinned by physical demand and a five-month strike in South Africa.
Palladium often tracks sister metal platinum, which has risen nearly 8 percent this year on supply concerns after the strike over wages takes out 40 percent of global platinum output and hits South Africa’s economy.
Palladium fell $2,25 an ounce to $849,75 by noon, having rallied to $854 on Tuesday, its strongest since February 2011. South Africa is the world’s second-biggest producer of the malleable metal, which has gained more than 19 percent this year.
“Palladium demand from industrial customers is not bad despite the high price level. People are buying palladium and we are seeing purchases from the auto, dental and chemical sectors,” said a physical dealer in Tokyo, who also trades gold and platinum.
“But demand for platinum for investment and the industrial sector is not good at all.” Platinum is also used in jewellery and auto catalysts.
South Africa’s Impala Platinum, the world’s No 2 producer of the precious metal, said it had nothing more to offer to resolve a five-month strike over pay that has cut output and slowed the economy.
The strike has cost Implats and other producers Anglo American Platinum (Amplats) and Lonmin collectively about $2bn in lost revenue.
Gold, which has been overshadowed by palladium and recent rallies in equities, was little changed at $1 261,26 an ounce, off a four-month low of $1 240,61 hit last week.
“Around these levels, we can say demand seems to be slowing down a little bit. On the investment side, I don’t think people are aggressive,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
“Sentiment is slightly bearish. We’ve got to see whether the downside at $1 200 is a good point to buy. On the upside, $1 275 to $1 280 is not easy to break through,” Leung said.
The euro came under mounting pressure yesterday as the European Central Bank’s liquidity package encouraged flows out of the zone, while Asian shares consolidated near recent highs following a flat finish on Wall Street. — Reuters.