Palladium hits record high on strained supplies, gold dips 1%
* Silver jumps to highest since late February
* Gold to average $1,775/oz in Q2 - analyst
* Graphic: 2021 asset performance Link (New throughout, updates prices, market activity and comments)
By Swati Verma
May 4 (Reuters) - Palladium soared to a record high on Tuesday on worries over short supplies of the metal used in emissions controlling devices in automobiles, while gold fell 1% after U.S. Treasury Secretary Janet Yellen said interest rates may need to rise.
Spot palladium XPD= rose 0.2% to $2,976.90 per ounce by 1:45 p.m. EDT (1745 GMT), after hitting an all-time high of $3,017.18.
"There are stricter pollution controls globally that we've not seen in the past, which means vehicles that were not previously required to use auto-catalysts will now have to, and hence more demand," said Bart Melek, head of commodity strategies at TD Securities.
"For the foreseeable future, the market will be in physical deficit and prices will go higher," he added.
Concerns about supply shortages were exacerbated after top producer Nornickel GMKN.MM announced disruptions at two mines due to flooding.
Spot gold XAU= fell over 1% after Yellen said U.S. interest rates may need to rise to prevent the economy from overheating as more support programs come on line.
Gold was last down 0.9% to $1,776.73 per ounce. U.S. gold futures GCv1 settled down 0.9% at $1,776.
Higher interest rates increase the opportunity cost of holding non-yielding bullion.
"Gold failing for the fourth time in two weeks ahead of $1,800, which has been the top of the range, triggered some profit taking before it dove $20 on Yellen's unexpected comment," said Tai Wong, head of metals derivatives trading at BMO.
"Yellen had a long and consistent history as a dove at the Fed."
Also reducing bullion's allure for other currency holders was a stronger dollar .DXY .
"We continue to see prices averaging $1,775/oz in Q2, given the physical market has cushioned the downside, ETP (exchange-traded products) outflows have started to slow and the dovish Fed messaging keeps risks skewed to the upside," said Standard Chartered analyst Suki Cooper.
Silver XAG= fell 1.8% to $26.40 per ounce, after hitting its highest since Feb. 26, while platinum XPT= eased 0.2% to $1,227.73.
Reporting by Swati Verma and Eileen Soreng in Bengaluru Editing by Marguerita Choy, Mark Potter and David Gregorio
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.