Palladium hit a record high on Tuesday, surging above $1,550 as a threatened strike by South African mine-workers added to supply concerns in an already tight market, while gold prices edged up on a subdued dollar.

Spot palladium, which traded as high as $1,554.50 per ounce, was down 0.5 per cent at $1,534 as of 0731 GMT. The metal has risen 21 per cent so far this year on a sustained supply deficit.

At least 15 mining firms in South Africa, a major producer of the auto-catalyst metal, have received notices of strikes to be held later this week.

“Support comes from supply side issues, mainly from South Africa, where a strike by the union has a potential to disrupt output further,” ANZ analyst Daniel Hynes said, adding that positive news on Sino-US trade is also providing support.

“There's been a feeling that demand overall would be impacted by tariffs on either side and this potential deal will minimise the risk of that occurring, so the market is viewing this as a positive move.”

US President Donald Trump said on Monday he may soon sign a deal to end a trade war with Chinese President Xi Jinping if their countries can bridge remaining differences, saying negotiators were “very, very close” to a deal.

“(However,) considering the rally we are seeing in prices, the risk of a correction is increasing by the day. (But) for the moment the trend is likely to continue,” Hynes said.

Meanwhile, spot gold lost 0.1 per cent to $1,326.36 per ounce and US gold futures were steady at $1,330 as the dollar remained subdued. The US unit was down against major currencies.

“Investors will now be moving away from the trade issue and will start to focus on macro releases and testimony by Federal Reserve Chairman Jerome Powell,” INTL FCStone analyst Edward Meir said in a note.

Powell will be testifying on US monetary policy and the economy before the Senate Banking Committee on Tuesday and Wednesday.

“Powell could use the opportunity to move perceptions a little bit more towards the hawkish side. In such a case, we could see modest dollar strengthening set in over the course of his remarks, likely exerting more downward pressure on gold.”

On the technical front, gold is expected to retest a support at $1,321 per ounce, a break below which could cause a loss to $1,311, according to Reuters analyst Wang Tao.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell on Monday.

Elsewhere, silver fell 0.2 per cent to $15.86 per ounce, while platinum was up 0.4 per cent at $852, after scaling its highest since early November at $857.50.

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