Palladium fell to a one-month low and platinum inched lower on Friday, adding to the previous session's sharp fall as investors awaited confirmation that South Africa's longest mining strike would end soon. The leader of South Africa's AMCU union said that a wage deal was imminent and he hoped to meet with producers Lonmin, Anglo American Platinum and Impala Platinum
on Friday or over the weekend to relay the response of his members to their offer. Palladium was down 0.7 percent per ounce to $816.00 by 1432 GMT, having touched its lowest since May 16 earlier. It plunged 4 percent on Thursday, just a day after rallying to a 13-1/2 year high on signs of a deadlock in the wage talks and on demand from the auto sector, which accounts for more 70 percent of total offtake.
Platinum fell 0.2 percent an ounce to $1,432.49. It lost almost 3 percent on Thursday - its biggest daily drop since June 2013. South Africa's crippling five-month strike in the platinum belt has lifted palladium prices by more than 15 percent this year, outpacing gains in platinum which is up just six percent.
Analysts' estimates put platinum output losses at 1.1 million ounces and palladium at around 600,000 ounces. "There has been some profit-taking in platinum and palladium, where long positions had reached high levels," VTB Capital analyst Andrey Kryuchenkov said. "Nobody really knows what is the damage that the industry suffered and how depleted the stocks are." Gold steadied, gaining some support from lower equities after the Bank of England raised the prospect of a rate hike, while violence in Iraq could burnish the metal's appeal as an insurance against risk.
The United States is not ruling out air strikes to assist the Iraqi government fight a growing radical Islamist insurgency, President Barack Obama said on Thursday, raising the possibility of US military intervention. Gold tends to have an inverse relationship with equity markets, with investors seeking refuge from riskier assets in times of political or financial troubles.
Gold was up 0.1 percent at $1,273.49 an ounce. The metal rose one percent on Thursday after weaker-than-expected US retail sales and jobless claims data tempered economic optimism. US gold futures for August delivery stood at $1,273.60, unchanged on the day. Tensions in Iraq sent oil prices to a nine-month high.
"If we see a new spike in oil prices, then the global economic recovery will stall and that will hit expectations for higher interest rates, which would have a negative impact on stocks and potentially support the precious metals," Saxo Bank senior manager Ole Hansen said. On the physical side, premiums for gold bars in Singapore, a centre for bullion trading in Southeast Asia, were steady at 80 cents to $1.20 an ounce to spot London prices.
Premiums in Hong Kong were also quoted at 80 US cents to $1.20 to spot London prices, while in Tokyo, gold bars were offered at discounts of 25 cents to on par. Silver rose 0.4 percent to $19.57 an ounce after hitting a 2-1/2 week high of $19.63.
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