Palladium set a fresh record high on Friday amid expectations that China’s economic stimulus would drive demand for the autocatalyst metal, while news that Russia may ban exports of precious metal scraps compounded worries of a supply deficit.
Gold also rebounded, moving back above $US1,300 an ounce, as the US dollar dipped on weak US economic data.
Chinese Premier Li Keqiang said Beijing was open to additional monetary policy measures to support economic growth this year.
Spot palladium surged to a record $US1,567.5 an ounce earlier in the session, with the precious metal later trading 0.3 per cent higher at $US1,562.39 per ounce.
‘The announcement of specific stimulus measures helped sentiment in China, which arguably is the global marginal consumer in automobiles, helping palladium climb quietly to new highs,’ said Tai Wong, head of base and precious metals derivatives trading at BMO.
‘There is (also) some concern that talk of possible scrap metal export ban in Russia could impact already extremely stretched palladium supplies,’ Wong added.
With the intention of promoting domestic refining of materials, Russia’s trade and industry ministry is considering banning exports of precious metals scrap and tailings from the country, the world’s largest producer of palladium, local newspaper Kommersant reported.
The price of the metal, used mainly in emissions-reducing catalysts for vehicles, has risen almost 90 per cent from a trough in mid-August last year and is up about 24 per cent so far in 2019.
‘Palladium is starting to reach lofty levels off of which it could correct a bit in the short term,’ said David Meger, director of metals trading at High Ridge Futures.
Meanwhile, gold rebounded following the previous session’s decline, gaining 0.5 per cent to $US1,302.62 an ounce en route to its second straight weekly rise.
US gold futures settled 0.6 per cent higher at $US1,302.90 an ounce.
Fueling gold’s advance, the US dollar fell against its rivals, weighed down by weak manufacturing and factory output data, ahead of a Federal Reserve meeting next week expected to shed more light on the outlook for U.S. interest rates.
‘For gold, whether it closes above or below $US1,300 will help determine sentiment early next week before focus moves to the new Fed dot plot,’ said BMO’s Wong.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the US dollar.
In other precious metals, silver gained nearly 1 per cent to $US15.31 per ounce, and platinum jumped one per cent to $US826.40.
In a potentially bearish development for the US dollar, China’s official news agency Xinhua reported representatives from China and the US had made some progress on trade in a call held on Thursday.
The US dollar has been preferred by investors as a safe haven amid deteriorating trade relations between the two countries.