THE price of palladium fell as much as 17% on Monday as signs of progress in negotiations between Russia and Ukraine emerged, said Reuters.
Progress in Russia-Ukraine peace talks also drove a nearly 2% retreat in gold, the newswire said.
“There’s been a sudden shift of expectations that there might not be much disruption with exports and that we could start to be seeing some demand destruction for the chip sector and auto manufacturers,” Edward Moya, senior market analyst at OANDA told Reuters.
Expectations that the peak in palladium may have already passed could also be driving this “excessive sell-off,” with prices likely to remain volatile in the short term, Moya added.
“There are some potentially positive developments on the Russia-Ukraine war front and that has rallied equities markets and dented the metals markets,” Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note.
However, hostilities between Russia and Ukraine continue with an analyst saying that it was too early to call the direction of travel in respect of the war.
Despite a risk-on mood across markets, “I wouldn’t call this (the recent rally) the peak in gold just yet, because this (Ukraine) situation is still uncertain. It’s so fluid,” Julius Baer analyst Carsten Menke said.
According to the World Platinum Investment Council (WPIC), platinum may benefit from market disruption caused by Russia’s invasion of Ukraine with consumers switching out of palladium.
“While global economic growth in 2021 surprised to the upside and was expected to stay strong in 2022, with the IMF projecting a growth rate of 4.4%, the consequences of the Russian invasion of Ukraine are difficult to predict at this juncture,” said Paul Wilson, CEO of WPIC.
“However, early indications are that supply disruption of palladium from Russia may well enhance platinum demand,” he added.
Wilson was commenting in the WPIC’s 2021 review and preview for 2022. The council thinks the platinum market will record a halving in the surplus that developed last year.
