Palladium, Gas and Wheat Surge On Supply Concerns

Today’s AM fix was USD 1,324.50, EUR 958.05 & GBP 792.21 per ounce.               

Friday’s AM fix was USD 1,317.25, EUR 948.62 & GBP 785.71 per ounce.  

Gold dropped $0.20, or 0.015%, by close of trading on Friday to $1,317.80/oz, but showed a gain of 1.10% on the week.  Silver lost $0.10 on Friday, closing at $19.95/oz with a 0.5% loss on the day but a small gain of 0.05% on the week.

Palladium in U.S. Dollars - 20 Years  (Thomson Reuters)

Palladium surged 1.7% for a fifth straight session on Monday to its highest since August 2011 on growing fears that supply would be hurt by more U.S. sanctions on top producer Russia and prolonged labour strikes in world number two producer, South Africa.

Gold jumped to a three-week high as mounting geopolitical tensions in Ukraine curbed risk appetite, sending equities lower and boosting bullion's safe-haven appeal.

Gold, silver, palladium, platinum and oil rose while European stocks fell for a third day after Russia called an emergency session of the United Nations Security Council amid worsening violence in Ukraine and a drift towards civil war. Clashes between Ukrainian forces and pro-Russian gunmen turned deadly this morning.

Platinum gained about 1% to its highest in nearly a month as labour strikes continued in South Africa.
Commodities in general climbed to a five-week high with the Standard & Poor’s GSCI gauge of 24 raw materials rising 0.6% in London, after earlier climbing to the highest level since March 3.

Palladium Mine Production By Country 2004 to April 2014 (Thomson Reuters)

U.K. natural gas, the European Union’s benchmark contract, climbed for a fourth day, surging 2.4% to the highest since march 27. Europe gets about a third of its natural gas from Russia, half of it through Ukraine.

Wheat surged 3.3%, nickel jumped to the highest since February 2013.

The Stoxx Europe 600 Index dropped 0.8% and S&P 500 Index (SPX) futures slipped 0.3%.

Palladium Supply and Demand - 2004 to April 2014 (Thomson Reuters)

Relations between Russia and the West are at their worst since the Cold War. Some Western governments believe Russia is preparing to take control of eastern Ukraine.

The United States is prepared to step up sanctions against Moscow if pro-Russian military actions in eastern Ukraine continue, a senior U.S. envoy said, with the sanctions set to target mining, banking and energy, among other sectors.

There is the real risk of a civil war where the old Cold War powers support rival factions by proxy. Another significant risk is of economic and trade war morphing into financial and currency war.

Palladium has outperformed other precious metals this year, gaining about 14% supported by fears over Russian supplies, and growing demand in the auto sector.

Gold and the precious metals are likely to see more gains as tensions over Ukraine are set to continue and look like they could deteriorate further.

Officials from the U.S. and Russia blamed each other at yesterday’s UN Security Council meeting for violence that left at least one Ukrainian serviceman dead

Five shares declined for every one that advanced in the Stoxx 600, with trading volumes 8.2% higher than the 30-day average, according to data compiled by Bloomberg. The MSCI Emerging Markets Index slid 0.6 percent, declining for a second day.

S&P 500 futures were little changed after the index slumped 2.7% last week, with the Nasdaq Composite Index losing 3.1%, the most since June 2012.

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