Palladium tumbled from a 13-year high and platinum slid as producers and the main union in South Africa agreed on a wage deal that the labor organization will take to its members in a bid to end a 20-week strike.
“In-principle undertakings have been reached” with the Association of Mineworkers and Construction Union, Impala Platinum Holdings Ltd. said on behalf of miners. Talks failed this week to end a strike since January by more than 70,000 mineworkers in South Africa, the largest producer of platinum and the second-biggest for palladium.
Investor holdings in palladium- and platinum-backed funds reached a record this week amid South Africa’s longest and costliest mining strike. Demand for the metals, which are mainly used in car pollution-control devices, will exceed supply for a third successive year, Johnson Matthey Plc data show. Passenger-vehicle sales in China, the largest auto market, rose 14 percent in May, the China Association of Automobile Manufacturers said.
“Palladium is probably the metal most exposed to a bout of long liquidation considering the strong rally,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “Platinum’s price behavior throughout has been much more benign and we are still not far from the price levels that was seen before the strike action began. We need to see the pen on paper before we can get too excited.”
Palladium for September delivery dropped 4.3 percent to $823.25 an ounce by 8:15 a.m. on the New York Mercantile Exchange. It touched $864.60 Wednesday, the highest since February 2001. Futures trading volume was more than triple the average for the past 100 days for this time of day, data compiled by Bloomberg showed. The metal for immediate delivery fell 4.3 percent to $824.15 in London, according to Bloomberg generic pricing.
Platinum for July delivery dropped 2.4 percent to $1,445 an ounce in New York. It reached $1,488.40 Wednesday, the highest since May 23. Prices rose 5.3 percent this year, compared with palladium’s 15 percent gain.
Anglo American Platinum Ltd., Impala and Lonmin Plc expect to get feedback Friday. South African government-led meetings ended June 9 without agreement. The AMCU is meeting members at various mines to obtain members’ opinion on the proposal.
“There’s certainly a risk of a correction if we see any agreement,” James Moore, an analyst at FastMarkets Ltd. in London, said by phone. “The fundamentals are still very favorable. We’re still getting supply disruption and demand continues to increase from the auto sector.”
Investors hold a record 91.9 metric tons of palladium in exchange-traded products backed by the metal, data compiled by Bloomberg show. Platinum assets reached an all-time high 86.5 tons on June 10 and were at 86.4 tons Wednesday, data show.
Gold slid 28 percent last year on expectations the Federal Reserve would slow bond purchases and the central bank, which has made four straight monthly cuts, next meets June 17-18. U.S. equities reached a record this week.
Bullion for August delivery rose 0.2 percent to $1,264 an ounce on the Comex in New York. It reached $1,267.10, the highest since May 28, rebounding from a four-month low set June 3. Silver for July delivery gained 0.4 percent to $19.245 an ounce.
“While gold has seen a bit of bounce, the outlook for prices remains negative as U.S. economic data continues to improve, supporting strength in the stock markets and tapering” by the Fed, said Sarah Xie, a research analyst at Hong Kong-based Wing Fung Financial Group Ltd.
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