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Palladium Falls to Two-Week Low on Russia-Ukraine Talks

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Sept. 3 (Bloomberg) -- Palladium declined to the lowest in almost two weeks on signs of easing tensions between Ukraine and Russia, the world’s largest producer. Gold gained for the first time in three sessions.

Russian President Vladimir Putin outlined a peace plan after agreeing with his Ukrainian counterpart Petro Poroshenko on steps toward a cease-fire in the conflict that has raged for more than five months. Palladium, used in pollution-control devices for cars, climbed to a 13-year high of $913 an ounce yesterday amid concern that Russia may face further sanctions.

Prices have gained 22 percent this year as auto demand rose and supplies shrank amid a five-month mine strike in South Africa, the second-biggest producer. A resolution to the Ukraine turmoil would help reduce concern that supply will tighten further as U.S. and European leaders threaten more restrictions.

“The market is relieved that U.S. and Europe will not slap any new sanctions on Russia,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “The long-term fundamentals remain intact.”

Palladium futures for December delivery fell 0.8 percent to settle at $875.95 an ounce at 1:16 p.m. on the New York Mercantile Exchange. Earlier, prices retreated to $870.05, the lowest for a most-active contract since Aug. 21.

ETF Holdings

Palladium and platinum demand this year will exceed mine output by the most ever, according to London-based Johnson Matthey Plc, which makes a third of the world’s catalytic converters. Holdings in exchange-traded funds backed by palladium surged 36 percent in 2014, while platinum funds gained 9.5 percent.

Chrysler Group LLC reported its best August for U.S. vehicle deliveries in 12 years, while Ford Motor Co., Toyota Motor Corp. and Nissan Motor Co. also posted results that surpassed analysts’ projections.

Platinum futures for October delivery closed 0.3 percent higher at $1,412.50 an ounce in New York, after touching $1,404, the lowest since April 24. The metal is also mostly used in catalytic converters.

Gold futures for December delivery rose 0.4 percent to $1,270.30 an ounce on the Comex in New York, after reaching $1,261.90, the lowest since June 17.

Silver futures for December delivery increased 0.2 percent to $19.189 an ounce on the Comex.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editors responsible for this story: Millie Munshi at mmunshi@bloomberg.net Joe Richter

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