Palladium retreats after crashing through $1,550, while gold is range-bound

Bengaluru — Palladium retreated on Tuesday as investors took profits after the autocatalyst metal breached $1,550 for the first time due to a worsening supply scenario, while gold held a tight range ahead of US Federal Reserve chair Jerome Powell’s testimony.

Spot palladium, which traded as high as $1,554.50/oz earlier in the day, was down 0.5% at $1,534 as of 11.16am GMT.

At least 15 mining firms in SA, a major producer of the metal, have received notices of strikes to be held later this week, providing further impetus to its gains.

The metal has risen more than 21% so far in 2019 on a sustained supply deficit.

“There are increased talks that palladium is entering into the bubble territory because of the relentless rally that we have seen. Those who are long are tempted to take profits while we potentially may see a few attempts to sell some shorts in the market,” Saxo Bank analyst Ole Hansen said.

Elsewhere, spot gold was barely changed at $1,326/oz and US gold futures were steady at $1,328.10 as the dollar remained subdued.

“The market is increasingly getting fed up, listening to the trade developments,” Hansen said, adding that bullion was now looking for further direction from the stock markets and concrete developments in US-China trade relations.

On Sunday, US President Donald Trump decided to delay a steep tariff hike on Chinese goods, touting progress in weekend trade talks.

Impetus can now be expected from Fed chair Jerome Powell’s testimony on US monetary policy and the economy before the Senate banking committee, due later in the day.

“Powell could use the opportunity to move perceptions a little bit more towards the hawkish side. In such a case, we could see modest dollar strengthening set in over the course of his remarks, likely exerting more downward pressure on gold,” said ANZ analyst Daniel Hynes.

Investors were also keeping a close eye on developments around Britain’s exit from the EU after reports that UK Prime Minister Theresa May was considering delaying the March 29 departure date.

“As long as geopolitical risks, concerns over …global growth [reaching a plateau] and speculation over the Fed taking a pause on rate hikes remain key themes, gold is insulated from extreme downside shocks,” Lukman Otunuga, research analyst at FXTM, said in a note.

Elsewhere, silver fell 0.2% to $15.86/oz.

Platinum was down 0.4% at $845.50, retracing from $857.50, its highest since early November.

Reuters