4 Min Read
* Palladium early tumble sets tone for day's heavy losses
* Traders say long PGM, short gold trade could unwind
* Iraq turmoil, oil rallies help boost gold
* Coming up: US producer prices Friday (Adds volume, detailed price actions, updates market activities)
By Frank Tang and Clara Denina
NEW YORK/LONDON, June 12 (Reuters) - Palladium posted its biggest daily losses in almost a year on Thursday after South African producers struck a deal with the union to end a crippling five-month strike, and violent conflict in Iraq burnished gold's safe haven status.
Taking a step closer to resuming operations after the longest strike in the 130-year history of South Africa's mines, Amplats, Implats and Lonmin reached an agreement in principle with the Association of Mineworkers and Construction Union (AMCU) about wages.
Union leaders said they will now take the offer to their striking members, who appear ready to accept the deal.
"For the very near term, this is going to be a speed bump for the prices of platinum group metals," said Thomas Capalbo, precious metals trader at brokerage Newedge.
Spot palladium fell almost 5 percent to a three-week low of $814.70 an ounce, just a day after it rallied to a 13-year high on signs of a deadlock in wage talks. It was down 4.1 percent at $822.05 by 2:50 p.m. EDT (1850 GMT), its biggest one-day drop in nearly a year.
Spot platinum fell more than 3 percent to a one-week low of $1,427.80 an ounce. It was last trading down 2.4 percent to $1.440.70.
A bout of heavy sell orders when the news broke in early U.S. session have set the tone for the palladium market for the rest the day, sending prices almost $40 lower. Volume in U.S. platinum futures also doubled its 30-day average, preliminary Reuters data showed.
South Africa is home to 80 percent of the world's known platinum reserves and the strike has halted production at mines that usually account for 40 percent of global output of the precious metal.
Thursday's dramatic developments with violence in Iraq escalating and signs of progress in South Africa prompted some investors to unwind long platinum group metals (PGM), short-gold bets.
With an improving global economic outlook and easing geopolitical tensions, the long-short trade was popular among metals investors earlier in the year.
Analysts said that PGM prices still have some upside as the miners start the long and slow process of getting operations back up.
"It's going to take a while to get things up and running," said Justin Holland, BNP Paribas managing director of base and precious metals trading.
Investors piled into gold after Sunni Islamist militants surged in Northern Iraq, threatening the country's future as a unified state.
Gold prices climbed on a combination of oil's rally, a dollar drop and weaker U.S. equities.
Spot gold was up 1 percent an ounce to $1,273. U.S. COMEX gold futures for August delivery settled up $12.80 to $1,274.
Silver rose 1.8 percent to $19.49 an ounce.
2:50 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL US Gold AUG 1274.00 12.80 1.0 1260.00 1275.10 111,059 US Silver SEP 19.573 0.360 1.9 19.200 19.595 13,495 US Plat JUL 1441.30 -39.80 -2.7 1436.30 1485.20 25,143 US Pall SEP 819.40 -40.75 -4.7 818.50 863.20 14,970 Gold 1273.00 12.76 1.0 1260.10 1274.50 Silver 19.490 0.350 1.8 19.190 19.550 Platinum 1440.70 -35.65 -2.4 1427.80 1480.00 Palladium 822.05 -34.85 -4.1 814.70 862.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 113,729 160,159 165,488 13.4 0.58 US Silver 76,291 43,959 55,164 16.97 0.30 US Platinum 27,729 13,456 12,330 18.82 -0.25 US Palladium 15,146 8,959 5,840 19.41 0.52 (Additional reporting by Lewa Pardomuan in Singapore; Editing by Susan Thomas, Susan Fenton and Nick Zieminski)