Palladium futures have closed at their highest level in two-and-a-half years, while platinum has neared a four-week high as escalating tensions between Russia and the West and continued mine-worker strikes in South Africa spur worries about supply.
Palladium for June delivery, the most active contract, on Friday rose $US14.50, or 1.8 per cent, to settle at $US806.80 a troy ounce on the New York Mercantile Exchange. This was the highest close since August 2, 2011, when palladium settled at $US826.90 an ounce.
Nymex platinum for July delivery rose $US2.50, or 0.2 per cent, to settle at $US1,462.60 an ounce, its highest level since March 17.
Platinum and palladium are often found together, and both metals have been marching higher in recent weeks amid worries that top palladium producer, Russia, would face a new set of trade sanctions from Europe and the US. The West’s diplomatic relations with Russia have frayed after it annexed Ukraine’s Crimea region in mid-March.
On Friday, the North Atlantic Treaty Organization (NATO) released additional surveillance images of Ukraine’s borders in an effort to show a build-up in Russian troop concentrations near Ukraine.
Meanwhile, the European Union planned to discuss new targeted sanctions against Russia on Monday in response to Moscow’s pressure on Ukraine.
“There’s concern that (sanctions) might disrupt supply,” said Howard Wen, a precious metals analyst with HSBC.
Russia supplies about 40 per cent of the world’s palladium, while South Africa supplies about 37 per cent, Wen said.
Metals traders also kept a close eye on South Africa, the world’s top platinum producer and second-largest palladium producer, where mine-worker strikes entered their 11th week.
“People are nervous about Russia and South Africa, and that is feeding a bit of interest to the palladium and platinum markets,” said Bill O’Neill, a principal with commodities investment firm Logic Advisors LLC.
O’Neill said he has been recommending that his clients hold platinum and palladium instead of gold.
Meanwhile, June delivery gold closed $US1.50 lower.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $US1,318.00; previous PM $US1,320.50
Jun gold $US1,319.00, down $US1.50; Range $US1,314.00-$US1,324.20
May silver $US19.946, down $US1.45; Range $US19.910-$US20.130
Jul platinum $US1,462.60, up $US2.50; Range $US1,451.70-$US1,464.90
Jun palladium $US806.80, up $US14.50; Range $US785.15-$US812.50