Palladium hit its highest ever on Tuesday, crossing the $1,600 an ounce mark for the first time as news that Russia is planning to ban exports of precious metals scrap fuelled concerns over an already supply-constrained market.
Spot palladium was up 0.7 percent at $1,594.08 an ounce at 1231 GMT, having hit a record high of $1,606 earlier in the session.
"There have been rumours that Russia would restrict exports of some scrap materials. When the market is as tight as palladium is, sometimes such news can take on more significance than it should," said Philip Newman, a director at Metals Focus.
"It comes back to the fact that you have an underlined tight market, where demand is far outstripping global supply."
Russia's trade and industry ministry last week said the proposed ban on exports of precious metals scrap and tailings would last from May 1 to Oct. 31.
Russia is a major producer of palladium, which is used mainly in catalytic converters.
News that China, the world's biggest auto market, will enforce stimulus measures to boost its tiring economy has also helped the case for the metal, analysts said.
Commerzbank attributed the spike in palladium prices to speculative buying interest.
Prices have nearly doubled since their mid-August lows and have already surged about 27 percent this year.
Meanwhile, gold held firm above the key psychological $1,300 level as expectations that the U.S. Federal Reserve will strike a dovish tone on interest rates at its policy meeting this week kept the dollar under pressure.
Gold, which bears no yield, tends to suffer when interest rates are rising.
Spot gold gained 0.4 percent to $1,308.48, while U.S. gold futures were 0.6 percent higher at $1,308.80.
"The dollar is under a little bit of pressure, providing some support to the metal," Capital Economics analyst Ross Strachan said.
Indicative of investor sentiment, holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose about 1.1 percent on Monday, their biggest one-day percentage gain since Jan. 18.
"The yellow metal has been on a very positive trajectory over the last six months as central banks have become notably more dovish around the globe and the dollar has hit a ceiling," OANDA said in a note.
"With the global economic outlook a cause for concern, the environment looks very favourable for gold."
Among other precious metals, silver shed 0.5 percent to $15.37 per ounce, while platinum gained 1.8 percent to $844.83 per ounce, having hit its highest since March 4 at $848.38, earlier in the session.
Source :- Moneycontrol.com
