Palladium soars, eyes best day in two decades on South Africa lockdown

Palladium surged 12% on Tuesday, on track for its biggest daily rise since 2000 as major producer.

South Africa locked down due to the coronavirus, while gold soared over 3% as a fresh round of stimulus measures paused a run for cash among investors.

Autocatalyst metal palladium rose to $1,930.79 per ounce, while platinum gained 6.2% to $682.04, also helped by the 21-day shutdown.

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“We believe this might provide significant support to Platinum Group Metals prices in the short term,” said Dmitry Glushakov, Head of Metals & Mining Research at VTB Capital.

“The country accounts for some 70% of global platinum mined supply and 35% of palladium, with a 21-day lockdown possibly resulting in a 4% and 2% of 2020 supply reduction respectively.”

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Spot gold was up 3.2% at $1,602 per ounce by 1200 GMT and at its highest since March 13, having posted its best day since June 2016 on Monday with a 3.7% rise. U.S. gold futures climbed 6.7% to $1,672.60 an ounce, and silver was up 4.3% at $13.82 to a one-week high.

“There’s no longer pressure to sell gold to cover margin calls and also, the U.S. dollar is a bit weaker,” said Quantitative Commodity Research analyst Peter Fertig.

“If measures to tackle the impact of the virus show an impact and the numbers of new cases decline, gold might rise as some longer-term oriented investors buy it as an inflation hedge.”

European shares attempted another rebound as the fresh wave of monetary and fiscal stimulus halted a global selloff in equity markets.

The Fed announced unlimited quantitative easing and programmes to support credit markets on Monday in a drastic bid to backstop an economy reeling from emergency restrictions on commerce to fight the coronavirus. The move triggered a dip in the dollar.

Goldman Sachs said inflationary concerns resulting from the central bank policy response to the outbreak should underpin gold this year as the “currency of last resort.”

Global central banks have taken a range of measures to mitigate the damage of the outbreak, which has infected more than 377,300 people and killed more than 16,500 globally. Also propping up bullion markets was the closure of three of the world’s largest gold refineries in Switzerland due to the outbreak that has squeezed supply of the physical metal, Stephen Innes, chief market strategist at financial services firm AxiCorp, said in a note.

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