Palladium extends gains to 13 year high on supply concerns

Monday, August 18, 2014

Spot palladium prices rallied to their highest levels in thirteen years today, as intraday prices briefly tested the area just above $900/oz before pulling back towards $898/oz where prices fluctuated throughout the remainder of the European session. Spot prices have surged higher for the 9th straight session as the metal breached resistance towards July consolidation around $880/oz late last week. Concerns that demand will outstrip supply amid shortages have seen palladium prices rally almost 28% since the start of the year. Price gains were supported by strike actions at some of South Africa’s largest producers which ended in June after five months of industrial action. Despite the resumption of operations, stocks of the metal used in catalytic converters have been drawn down significantly and with the US and EU imposed sanction on Russia, market participants are right to be concerned that supplies this year may struggle to meet demand.

Following the lack of significant escalations regarding the situation in Ukraine and the subsequent erosion of risk premium in front month Brent futures as the situation in Iraq also made steady progress, global equity markets were supported higher. Equities on both sides of the Atlantic pushed higher as investors breathed easy, prompting a relief rally that extended gains in London’s blue chip index for a fourth straight session.

The situation remains tense between Russia and Ukraine, however, market participants welcomed the dearth of fresh surprises over the weekend and while Wall Street markets took a hit on Friday after news broke of Ukrainian forces attacking a Russian armoured convoy, sanguine markets prevailed at the open today with both the DJIA and SPX gaining traction for moves higher from the outset. 

Palladium prices rallied to a thirteen year high earlier, above $900/oz 

XPD Curncy Palladium Spot Oz 2014 08 18 16 02 07

FTSE 100 extends gains for a fourth straight session on relief rally 

UKX Index FTSE 100 Index Dail 2014 08 18 15 49 10

Topics: Brent, Palladium
More from: Kash Kamal