Platinum exchange traded products received the largest inflows in over eight months on expectations that South African wage talks will break down.

ETF Securities’ Platinum ETPs saw US$28mn of inflows, as the wage negotiation season in South Africa officially started last week.

Despite government efforts to prevent union rivalries from exacerbating the already tense situation, investors remain unconvinced. With over 70% of the world’s supply of platinum mined in South Africa, supply disruptions and political hurdles in the country can have a big impact on prices. Supply side issues in South Africa are likely to remain an important platinum price driver in 2013.

At the same time, palladium ETPs registered US$3.4mn of outflows last week on profit taking. Recent strong price performance has been driven by improving demand, coupled with a sharp reversal of strong Russian palladium exports in April.

Physical gold ETPs see more outflows even as disappointing US growth and jobs data pushed the gold price higher. ETP investors continued to cut their gold holdings last week, with gold ETPs seeing outflows of US$157mn, as tactical investors took advantage of the recent gains. The gold price rose above US$1,400/oz. for the first time in two weeks, breaking above key technical resistance before fading in early Monday trade.

Tepid economic data from the US eased fears that the Fed will imminently cut back on quantitative easing, sending precious metals higher last week. At the same time, mixed data from China kept investors on edge, and weighed on more cyclical commodities such as copper. With Fed policy so tightly tied to labor market improvements, all eyes will be on the US non-farm payrolls data this week. Last month’s figures surprised to the upside and similarly strong numbers could fuel speculation that the Fed will taper policy stimulus in the near future. However, with long-end bond rates increasing sharply, rising funding costs will likely constrain any near-term tightening from the Fed. Extended gold shorts and continued strong physical demand have the potential to push the gold price sharply higher if payrolls disappoint.