Palladium rose to a new record high on Tuesday, exceeding the psychological barrier of 1,550 USD per ounce due to fears for a strike of the South African miners. This adds to concerns about supply disruptions, which are relatively limited in a highly demanding environment. The weaker US dollar also supported price growth.
The spot price of palladium rose to a level of 1,554.50 USD per ounce, or which represents an increase of about 1%. The metal grew 23% since the beginning of the year because of its supply shortage and in an environment of increased demand.
Meanwhile, spot gold rose by 0.1% to 1,328.11 USD per ounce, while the US gold futures rose by 0.2% to 1,331.70 USD per ounce.
Investors will now shift their attention from trade issues to macroeconomic and Fed policy. The Fed Chairman Jerome Powell will have a speech on the US monetary policy and the prospects for the economy to the Senate on Tuesday and Wednesday. He could use the opportunity to move a few prospects to potential interest rates so that some stabilization of the dollar and possibly downward pressure on gold and other metals.
Among the other precious metals, the silver appreciated by 0.1% to 15.90 USD per ounce, while platinum added 0.9% to 856.5 USD per ounces, which is its highest value since early November.
Gold price analysis
Gold extended its steady decline from intraday highs, around the 1,330 USD area, and is currently placed at the lower end of its daily trading range.
Having failed to capitalize on Friday’s attempted bounce, the precious metal traded with a mild negative bias and has now moved within striking distance of last week’s swing low. The commodity did get a minor lift during the Asian session on Tuesday amid reviving safe-haven demand in wake of rising geopolitical tensions in the Asian continent, albeit lacked any strong follow-through.
Immediate support for the gold is pegged near the 1,321 USD area, below which the metal is likely to accelerate the slide towards the 1,315-1,314 USD region en route the next major support near the 1,305 USD horizontal zone.
On the flip side, the 1,331-1,333 USD region now seems to have emerged as an immediate hurdle, which if cleared might lift the commodity back towards 1,340 USD supply zone.
Palladium price analysis
The spot price of palladium rose to a level of 1,554.50 USD per ounce. The commodity appreciated by more than 23% since the beginning of the year. More severe emissions requirements for cars have shifted carmakers demand from diesel to petrol engines. And palladium is mainly used in catalysts of gasoline-powered cars.
At least 15 mining companies in South Africa, a major producer of palladium, have been notified of strikes to be held later this week.
Price support comes from supply issues, mainly from South Africa, where strikes have the potential to disrupt further production. The positive news about Sino-American trade talks also provides support. The market has the feeling that overall demand will be affected by avoiding tariffs on both sides, and this potential deal will minimize risk. Thus, the market sees this as a positive move.
However, given the rally we see in prices, the risk of correction increases from day to day. For the time being, however, the uptrend is likely to continue.