PRECIOUS-Deficit-stricken palladium soars in record run; gold eyes weekly gain

Reuters

Warning: This material has been prepared by a third party company, Reuters, which is independent of Davy. Davy has not reviewed the material and accepts no responsibility for errors or omissions, or for the information or opinions contained therein. It does not constitute investment advice.

    * Gold up 1.5% so far this week
    * Silver eyes first weekly rise in three
    * GRAPHIC-2019 metals performance: http://tmsnrt.rs/2jvdmXl

 (Updates prices)
    By Asha Sistla
    Sept 20 (Reuters) - Palladium soared to an all-time high on
Friday, with producers locking in stocks of the auto-catalyst
metal squeezed by a sustained supply shortage, while gold firmed
en route to its first weekly gain in four supported by Middle
East tensions.
    Palladium  XPD=  rose 0.9% to $1,637.13 an ounce as of 1:44
p.m. EDT (1744 GMT), having touched a record $1,654.56. The
metal was up 2% so far for the week, on track for a seventh
straight weekly gain.
    "Modest producer hedging and speculative interest in an
extremely illiquid market has driven borrowing costs in the
metal sharply higher," said Tai Wong, head of base and precious
metals derivatives trading at BMO.
    "Last Friday it cost perhaps a percent to borrow for a month
 annualised , today it has been borrowed at 5%. The market has
been and remains in fundamental deficit, so conditions are
likely to remain tight for some time."
    The price of palladium, used mainly in emissions-reducing
catalysts for vehicles, has surged about 30% this year.
    "Fundamentals have not changed but no one buys way in
advance. They buy when they need, typically manufacturers. So
manufacturers have come in and done some long-term hedging,
driving the price high," said an analyst based in New York.
    "And when a trend starts occurring like that, then you have
the industries jumping on the bandwagon, which drives it even
higher." 
    Spot gold  XAU= , meanwhile, gained 0.6% to $1,508.63 per
ounce, up about 1.5% so far this week. U.S. gold futures  GCcv1 
settled up 0.6% at $1,515.10.
    "It's a bullish consolidation we see," said Fawad Razaqzada,
market analyst with Forex.com, adding that bullion is also being
supported by safe-haven interest driven by tensions in the
Middle East.
    The United States said it was imposing sanctions on Iran's
national bank after last weekend's attack on Saudi Arabian oil
facilities. Iran denies involvement in the attack.  urn:newsml:reuters.com:*:nW1N25A00Z
 urn:newsml:reuters.com:*:nL5N26B23I
    The Federal Reserve cut interest rates for the second time
this year on Wednesday but gave mixed signals on future rate
cuts. urn:newsml:reuters.com:*:nW1N262038
    Lower interest rates reduce the opportunity cost of holding
non-yielding bullion and weigh on the dollar, making gold
cheaper for investors holding other currencies.
    "(The) Global outlook still looks quite unfavourable and
central banks around the globe will continue to ease monetary
policy, which will be beneficial for gold," said FXTM analyst
Lukman Otunuga.
    Markets also focused on U.S.-China trade talks in Washington
before high-level discussions next month.  urn:newsml:reuters.com:*:nL2N26A0BZ
    Silver  XAG=  firmed 0.3% to $17.83 an ounce, up about 2%
for the week and was heading for its first weekly gain in three,
while platinum  XPT=  remained flat at $937.82.

 (Reporting by Asha Sistla and Brijesh Patel in Bengaluru;
Editing by Dan Grebler and Grant McCool)
 ((Asha.Sistla@thomsonreuters.com; If within U.S. +1 646 223
8780; outside U.S. +91 80 6749 5072; Reuters Messaging: Reuters
Messaging: asha.sistla.thomsonreuters.com@reuters.net))

Warning: This content may be provided by regulated and unregulated entities and is not created, reviewed or endorsed by Davy. It is provided for general information purposes only and does not constitute a recommendation or solicitation to purchase or sell any security or make any other type of investment or investment decision. Importantly, it does not constitute investment advice, as it does not contemplate the personal circumstances of any particular person or group of persons. Neither Davy nor the providers of the Third Party Content will be liable for any investment decision made based on the reliance on or use of such data, or any liability that may arise due to delays or interruptions in the delivery of the Third Party Content for any reason.