March 23, 2015 / 3:30 PM / 3 years ago

Palladium ETFs record biggest weekly outflow since August

* Palladium ETF holdings down 50,000 oz last week

* Biggest weekly outflow since week ending Aug. 31

LONDON, March 23 (Reuters) - Palladium-backed exchange-traded funds saw their biggest weekly outflows since August last week as prices of the white metal reversed the trend of the last two years to fall as gold, silver and platinum rose.

Palladium ETFs, popular investment vehicles which issue securities backed by physical metal, saw outflows of nearly 50,000 ounces in the week to Friday, Reuters data showed.

In the same period palladium prices fell 2.1 percent, even though other precious metals ended the week higher after an unexpectedly dovish statement on interest rates from the U.S. Federal Reserve.

Some investors are taking advantage of palladium’s ourperformance of other precious metals over the last two years to sell out of ETFs, analysts said. The funds are now on track for the biggest quarterly drop in their holdings since 2011, having seen outflows every week this year.

“These outflows feel like profit-taking,” Mitsui Precious Metals analyst David Jollie said. “In ounce terms, the outflows aren’t huge, but they do represent a reversal of last year’s buying interest. They send a dual bearish signal to the market, first simply by returning metal, but also by being so visible.”

“At the same time, gross long speculative positions in palladium on NYMEX have been below last year’s average levels so far this year, so it does suggest bullish sentiment has weakened even though bearish sentiment has not intensified much.”

Nearly 32,000 ounces of last week’s outflows came from Johannesburg-listed New Gold Palladium ETF , the world’s second largest palladium ETF.

The fund was one of two launched last year in South Africa, both of which grew quickly, pulling in between them 1.2 million ounces of palladium in 2014 to almost double global palladium ETF holdings.

Outflows were also seen from the ZKB Palladium ETF, the Julius Baer Physical Palladium Fund, and products operated by ETF Securities in London and New York.

Palladium is seen as having among the best underlying fundamentals of the major precious metals.

Analysts say there are concerns over security of supply from major producers Russia and South Africa, while demand for the autocatalyst metal from carmakers in the United States, China and the emerging markets is expected to hold firm.

“The further development of ETFs will be critical for short-term price developments (in palladium),” precious metals house Heraeus said in a note on Monday. (Reporting by Jan Harvey; Editing by Janet Lawrence)

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