With two new physically backed palladium exchange traded funds on the way, palladium prices spiked to $800 Friday as traders anticipate increased demand for the metal on top of supply concerns out of South Africa and Russia, the two largest producers.
Palladium prices touched $800 per ounce in morning trading but leveled off around $789 per ounce in midday action. The ETFS Physical Palladium Shares (NYSEArca: PALL) was up 2.3% Friday. PALL has gained 7.9% year-to-date.
A North American PGM trader attributed the 2.6% surge in Palladium prices Friday during tepid action in the overall metals commodity market to the “three-headed monster,” pointing to the two-month old South African strike, trade sanctions against Russia and new demand needed to accommodate two new palladium ETFs, Kitco News reports. [Palladium ETF Finds Favorable Catalysts]
Moreover, Interfax news agency stated that Russian palladium production declined 30% in February month-over-month.
On Wednesday, Standard Bank of South Africa stated that it was launching a palladium-backed ETF on the Johannesburg Stock Exchange. On Thursday, Absa Bank, the company behind the world’s largest platinum-backed ETF, announced it will also launch the JSE-listed palladium ETF, NewPalladium, on March 27. [Absa Capital to Launch South-Africa-Listed Palladium ETF]
Physically backed precious metals ETFs acquire and store the metal in a vault, essentially removing a portion of the world’s supply from circulation.