PRECIOUS-Palladium firms near 13-1/2 year high on supply fears

Thu Jun 12, 2014 3:03am EDT

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By Lewa Pardomuan

SINGAPORE, June 12 (Reuters) - Palladium held firm near a more than 13-year high on Thursday as supply concerns from a five-month strike in No.2 producer South Africa triggered buying from industrial users and investors.

Palladium, used in jewellery and catalytic converters to clean exhaust emissions - chiefly of gasoline-powered vehicles, has gained more than 20 percent so far this year, overshadowing its sister metal platinum that has risen about 8 percent.

Cash palladium added 3.35 an ounce to $860.25 by 0643 GMT, having rallied to $862.50 an ounce on Wednesday, its highest level since February 2001.

Platinum, also used in jewellery and auto catalysts, was almost steady at $1,476.60 an ounce.

"I am still bullish on palladium. I think in a couple of years or in a shorter period of time, palladium (price) will get closer to platinum," Yuichi Ikemizu, branch manager for Standard Bank in Tokyo. "If the strikes end, then we may see some selling. I think we are going to up to $900 in the near future."

Physical dealers in Japan noted buying interest from investors and the industrial sector, sending the most active palladium contract on the Tokyo Commodity Exchange, currently April 2015, to its highest since early 2001.

As annual wage talks kick off in South Africa, a five-month strike in the platinum sector - that has taken out a significant portion of the world's output in platinum group metals, weighs large and could influence how other unions negotiate pay demands this year.

Data from refiner Johnson Matthey showed the deficit in the palladium market is set to widen to 1.612 million ounces this year, its largest shortfall in at least 34 years.

But spot palladium faces a resistance at $870 per ounce and may retrace to $800 over the next four weeks, according to Reuters market analyst for commodities and energy technicals Wang Tao.

The resistance has been identified as the 76.4 percent Fibonacci retracement on the fall from the Jan. 11, 2001 high of $1,095 to the April 17, 2003 low of $140. It triggered a deep correction in February 2011 and may cause another one towards the trendline that descends from $1,095, he added.

Gold added $1.07 an ounce to $1,261.31, while U.S. COMEX gold futures for August delivery was little changed at $1,261.70 an ounce.

In other markets, Asian shares slipped on Thursday after a retreat on Wall Street and escalating violence in Iraq delivered a one-two punch to risk appetite, which in turn kept oil prices near three-month highs.

Precious metals prices 0643 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1261.31 1.07 +0.08 4.68 Spot Silver 19.17 0.03 +0.16 -1.24 Spot Platinum 1476.60 0.25 +0.02 7.98 Spot Palladium 860.25 3.35 +0.39 20.65 COMEX GOLD AUG4 1261.70 0.50 +0.04 4.98 6891 COMEX SILVER JUL4 19.20 0.03 +0.00 -0.88 2485 Euro/Dollar 1.3537 Dollar/Yen 102.05 (Editing by Himani Sarkar)

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