Palladium climbs to highest level since 2011; gold slips

NEW YORK: Palladium, on Friday, advanced to the highest in more than two years as the US threatened more sanctions against Russia, the world’s largest supplier of the metal used in pollution-control devices for cars. Gold fell.

US Treasury Secretary Jacob J Lew said the country may impose additional "significant" measures against Russia if it continues to escalate tensions in Ukraine. Lithuania said on Friday that it sent a warship to the Baltic Sea, claiming a Russian military vessel disturbed civilian shipping in the area.

Palladium gained 12% this year as the threat of disruptions in Russian shipments compounded supply concerns fuelled by a strike by miners in South Africa, the second-biggest producer, and signs of accelerating auto sales in the US and China. Demand will exceed supply for a third year in 2014, Morgan Stanley said in a report April 8.

"We already have significant problems with production because of the labour strike in South Africa," Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. Additional sanctions may limit the availability of financing for Russian producers, "impeding the flow of the metal," he said.

Palladium futures for June delivery gained 1.8% to settle at $806.80 an ounce on the New York Mercantile Exchange on Friday, after touching $812.50, the highest since August 3, 2011.

US Secretary of State John Kerry said on April 8 that additional sanctions targeting Russia’s energy, banking and mining industry are "all on the table." Russia’s biggest metal and mining companies are marshaling about $5 billion of loans with international banks since the annexation of Crimea last month cut off bond markets.

Platinum futures for July delivery rose 0.2% to $1,462.60 an ounce on the Nymex, posting a second weekly gain. On the Comex in New York, gold futures for June delivery slipped 0.1% to $1,319 an ounce. Silver futures for May delivery lost 0.7% to $19.946 an ounce.