Precious Metals: Palladium at 13-Year High and Silver Down For Sixth Straight Week Amid Fix Overhaul

Palladium has rallied near a 13-year high while silver closed its sixth straight week down even as the losses in gold and platinum did not impact the respective trends significantly.

Increasing industrial demand and fears of supply shortage have been keeping palladium high for quite a while, and the metal has soared 25.4% from end-2013.

The main suppliers of palladium, Russia and South Africa, have individual reasons to experience lower supply. The former is facing international trade sanctions on account of its alleged role in the Ukraine unrest, while the latter has been dealing with continuous mine strikes.

Palladium for immediate delivery traded as high as $894.50 on Friday, its highest in about 13 years. At the close of $893.50, the metal was up 3.75% on the week.

On Friday, 15 August, all the precious metals except palladium declined and silver continued the trend of weekly drops, which started mid-July, to end the week at a two-month low.

New Way of Silver Fix

Silver was in the news on Friday as the white metal's daily fixing has adopted a more transparent and inclusive method, ending the current one which is 117 years old.

The CME group is providing the platform and algorithm, while Thomson Reuters acts as administrator. The LBMA will publish volumes and participants of each daily settlement on its website, according to a Reuters report.

The overhaul of the fix process has just begun with silver, and all precious metals benchmarking are in the process of entering the new system.

Spot silver ended Friday's deals at $19.56, after falling to as low as $19.48, its lowest since 17 June.

Gold and Platinum

Gold dropped to $1304.48 from $1313.30 on Friday, ending the week little changed. The metal has been holding a range of $1280-$1322 for the past four weeks.

The yellow metal tested a long-term support of $1180 in January but failed to break below and has since shown a broadly sideward trend.

Platinum dropped 1.3% in the week to $1457 on 15 August, just reversing the gains of the previous week.

The metal has been maintaining an upward channel so far this year and is now 6.6% stronger than its end-2013 level.

Dollar Cues

The market is now waiting for fresh interest rate cues from the US as Federal Reserve chairwoman Janet Yellen is likely to touch upon important policy matters in her address to the Jackson Hole Symposium from 21-23 August.

"Re-Evaluation of Labour Market Dynamics" will be the main topic of discussion at the Jackson Hole event this year, and the Fed's evaluation of the US jobs market will provide fresh cues as to when the world's largest economy will start hiking interest rates.

US unemployment rate has fallen to 6.2% in July, breaking below the range of 6.3-6.6%, which the Fed has predicted for until end-2014.

The strength of US jobs data has kept the dollar sentiment upbeat but Yellen has remarked that the slack in the labour market needs to be addressed first before hiking the rates on the basis of the unemployment rate.