The ETFS Physical Platinum Shares (NYSEArca: PPLT) and the ETFS Physical Palladium Shares (NYSEArca: PALL) are trading slightly lower Tuesday, but those modest declines may be short-lived due to forecasts of additional shortfalls of the platinum group metals.

Last week, “platinum and palladium reached new 2014 highs while gold and silver remained within increasingly constrained ranges. Platinum and palladium added another 1.3% and 1.5% on the week for year-to-date gains of 9.3% and 15.6% respectively supported by ongoing strikes in South Africa and by the Ukrainian crisis,” according to a new research note from ETF Securities.

While some technicians have doubted the impact of geopolitical headlines on palladium futures, it is impossible to deny that PALL is up almost 12% over the past 90 days as economic sanctions have hit Russia and mine strikes in South Africa have stretched into an eighteenth consecutive week. [More Good News for Platinum, Palladium ETFs]

Russia and South Africa are the two largest palladium-producing countries. Last week, “holdings of physically-backed palladium exchange-traded funds hit record highs this week after heavy inflows into two products launched in South Africa in March pulled in half a million ounces of metal in less than two months,” Reuters reported.

Analysts continue to forecast supply deficits for platinum and palladium, which could further boost PPLT and PALL.

“Johnson Matthey published its latest forecast for the industry, projecting a 1.2mn oz. supply deficit for platinum, which is about 14% of expected gross demand (up from 0.9mn oz. deficit last year) and a larger 1.6mn oz. supply deficit for palladium, which is about 15% of expected gross demand, (up from 0.4mn oz. last year),” said ETF Securities.

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