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Gold dips but palladium climbs to new high

LONDON: Gold prices faded in late Tuesday business in Europe, but palladium set the latest in a series of highs as the motor industry chased after scarce Russian supply of the metal, traders said.

Palladium, used chiefly in catalytic converters to clean up engine exhaust gases, was fixed at a record $567.00 an ounce, up from $540.00 just 24 hours earlier and extending its gains since the start of the year to almost a third.

The Russians supply around 70 percent of the world's annual palladium needs and 20 percent of its platinum, also used to clean exhaust emissions. yet to find substitute metals for making autocatalysts.

Gold, which on Monday touched a three-month high of $319, dipped as expectations that miners would rethink their hedging programmes took a dent on news North America's second largest gold miner would stick with its forward sales programme.

The market finished the session at $296.00/$298.00, compared with the European close on Monday of $312.50/$314.50 and New York's closing $300.20/$302.20

The market had been expecting that Barrick Gold Corp ABX.TO might follow other producers and radically cut back its commitment to hedge sales, potentially reducing the availability of metal on the market.

Placer Dome Inc PDG.TO, the world's fifth-largest miner, said on Friday it would suspend its hedging programme, a practice adopted by most producers to sell future output to lock in higher prices. Placer Dome's move had pushed gold to a peak of $319.00 an ounce bid on Monday.

Mining firms have been re-examining their hedging strategies since last October's rally, prompted by European central banks' pledge to cap gold sales, lending and derivatives activities.

Platinum, less dependent than palladium on Russian supply, was quoted lower at $509.50/$513.50, against New York's Monday close of $525/$530.

Silver was quoted at $5.24/$5.27 after closing at $5.22/$5.25 in New York overnight.-Reuters