March 15, 2019 / 3:45 PM / 9 days ago

PRECIOUS-Palladium soars to record, gold moves back up above $1,300/oz

(Updates prices)

* Palladium hits record high of $1,567.50/oz

* Gold eyes second straight weekly gain

* GRAPHIC-2019 commodities returns: tmsnrt.rs/2jvdmXl

By Arijit Bose and Karthika Suresh Namboothiri

March 15 (Reuters) - 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 $1,300 an ounce, as the dollar dipped on weak U.S. 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 $1,567.5 an ounce earlier in the session. As of 1:42 p.m. EDT (1742 GMT), the precious metal was trading 0.3 percent higher at $1,562.39 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 percent from a trough in mid-August last year and is up about 24 percent 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 percent to $1,302.62 an ounce en route to its second straight weekly rise.

U.S. gold futures settled 0.6 percent higher at $1,302.90 an ounce.

Fueling gold’s advance, the 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 $1,300 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 dollar. In other precious metals, silver gained nearly 1 percent to $15.31 per ounce, and platinum jumped 1 percent to $826.40.

In a potentially bearish development for the dollar, China’s official news agency Xinhua reported representatives from Beijing and Washington had made some progress on trade in a call held on Thursday.

The dollar has been preferred by investors as a safe haven amid deteriorating trade relations between the two countries.

Additional reporting by Arpan Varghese in Bengaluru, editing by G Crosse

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