Platinum and palladium soar

Palladium futures (NYMEX:PAN14) jumped to a 39-month high and platinum (NYSE:PPLT) headed for the longest rally since April after South African government mediation failed to end a 19-week strike at the largest mining companies. Gold (COMEX:GCN14) advanced.

Anglo American Platinum Ltd. (LON:AAL), Impala Platinum Holdings Ltd. (JSE:IMP), and Lonmin Plc (LON:LMI) said they will consider steps to end the dispute. More than 70,000 mineworkers have been on strike since January in South Africa, the world’s largest producer of platinum and the second-biggest for palladium.

Several rounds of talks have failed to end the impasse that has idled 60 percent of output and caused the economy to contract in the first quarter. Through yesterday, palladium gained 17 percent this year and platinum rose 5.9 percent. Demand for the metals, used for pollution-control devices in vehicles, will exceed supplies for the third straight year, Johnson Matthey Plc data show

“The strike remains unresolved, and this could rumble on for some time,” Robin Bhar, an analyst at Societe Generale SA in London, said in a telephone interview. “That will gradually tighten up supply. There’s quite a bullish outlook from the demand side” as consumption by car companies increases, he said.

Palladium futures for September delivery rose 1.4 percent to $853.50 an ounce at 11:03 a.m. on the New York Mercantile Exchange. Earlier, the price reached $855.65, the highest for a most-active contract Feb. 22, 2011.

Platinum futures for July delivery gained 1.8 percent to $1,481.10 an ounce. The price headed for the fifth straight gain, the longest rally since April 4. Trading was 60 percent above the average for the past 100 days for this time, data compiled by Bloomberg showed.

Job Cuts

The strike by members of the Association of Mineworkers and Construction Union has cost companies about 22 billion rand ($2.1 billion). The latest negotiations were overseen by Minister of Mineral Resources Ngoako Ramatlhodi, and the chances of job cuts at mines are rising, he said.

A union official said members will meet starting today on a response to the outcome of talks.

“People are getting very worried that the supply situation is worsening as the strike prolongs,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “We could see prices climbing higher.”

Johnson Matthey

Palladium demand will top supplies by 1.6 million ounces this year and platinum’s shortfall will be 1.2 million ounces, according to data from London-based Johnson Matthey, which makes a third of the world’s catalytic converters.

Holdings in exchange-traded products backed by palladium and platinum have climbed to records, according to Bloomberg data.

On the Comex in New York, gold futures for August delivery rose 0.5 percent to $1,260.30 an ounce. Earlier, the price reached $1,263.80, the highest since May 28.

Last month, gold fell 3.9 percent, the most this year. The price touched a 17-week low of $1,240.20 on June 3.

“Gold appears to be steadying after the May slump,” Howard Wen, an analyst at HSBC Securities (USA) Inc., said in a note. “We do expect the recent price decline to encourage some emerging market bullion demand, but we do not believe this has fed into more stable gold prices, at least not yet.”

Silver futures (COMEX:SIN14) for July delivery rose 0.7 percent to $19.19 an ounce. Earlier, the price reached $19.245, the highest since May 27.

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