Palladium dives about 17% as Russia supply fears recede

A machine engraves information on an ingot of 99.98 percent pure palladium at the Krastsvetmet non-ferrous metals plant in Krasnoyarsk
FILE PHOTO: A machine engraves information on an ingot of 99.98 percent pure palladium at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk

March 14, 2022

By Bharat Gautam

(Reuters) – Palladium slumped nearly 17% in a sharp correction after rallying to an all-time high on the Ukraine crisis, as worries eased that supplies of the autocatalyst metal from top producer Russia may be hit.

Progress in Russia-Ukraine peace talks also drove a nearly 2% retreat in gold.

Palladium XPD=, used in car engine exhausts to reduce emissions, dipped 13.6% to $2,433.35 per ounce by 1533 GMT, facing its biggest daily percentage drop in two years. It fell as much as 16.8% earlier in the session.

Platinum XPT= dropped 3.2% to $1,044.79.

Russian mining giant Nornickel’s GMKN.MM biggest shareholder told Russian RBC TV that the group managed to secure alternative routes for its deliveries of palladium despite logistical issues. (Full Story)

“There’s been a sudden shift of expectations that there might not be much disruption with exports and that we could start to be seeing some demand destruction for the chip sector and auto manufacturers,” said Edward Moya, senior market analyst at OANDA.

Expectations that the peak in palladium may have already passed could also be driving this “excessive sell-off,” with prices likely to remain volatile in the short term, Moya added.

Graphic: Palladiums slumps after record rally: https://fingfx.thomsonreuters.com/gfx/mkt/myvmnxlkmpr/PalladiumFreefall.png

Denting appetite for safe-haven gold, tentative hopes of progress in Russia-Ukraine peace talks lifted equity markets. MKTS/GLOB (Full Story) (Full Story)

Spot gold XAU= dipped 1.5% to $1,954.96 per ounce, while U.S. gold futures GCv1 fell 1.3% to $1,959.00. Silver XAG= dropped 2.4% to $25.18.

Despite a risk-on mood across markets, “I wouldn’t call this (the recent rally) the peak in gold just yet, because this (Ukraine) situation is still uncertain. It’s so fluid,” Julius Baer analyst Carsten Menke said.

Short-term speculative traders who had bought gold due to the war are possibly booking profits, Menke added.

Also pressuring non-yielding bullion, benchmark U.S. 10-year Treasury yields jumped, as the Federal Reserve is expected to raise interest rates this week.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Jan Harvey)