Palladium tumbled to a one-month low on Friday, extending its biggest drop in nearly a year in the previous session, as investors awaited confirmation that South Africa's longest mining strike would end soon. Gold prices edged up after Thursday's 1 percent gain. The safe-haven metal, however, failed to rally further on market expectations that security conditions in Iraq will improve soon, traders said.
The leader of South Africa's striking AMCU union said on Friday he hoped to meet the three major platinum firms over the weekend to give them formal feedback from workers about a wage offer that could mean the end of a five-month strike. On Wednesday, palladium had rallied to a 13-year high on speculation of a deadlock in wage talks.
Palladium, however, tumbled as much as 5 percent on Thursday on news that platinum group metal (PGM) producers and the AMCU agreed in principle on a wage deal, taking a step closer to resuming operations after the longest strike in the 130-year history of South Africa's mines. Analysts said PGMs still have some upside as the miners start the long and slow process of getting operations back up.
"South African supply issues do not end with a resolution of the 21-week old strike," said UBS metals strategist Edel Tully. "A correction in PGMs would present an attractive entry point." Palladium was down 1.2 percent to $812 an ounce by 3:11 pm EDT (1911 GMT), having touched its lowest since May 16 earlier. The metal lost about 3.5 percent for the week, its biggest decline since January.
Platinum fell 0.4 percent to $1,428.50 an ounce. It had lost almost 3 percent on Thursday in its biggest daily drop since June 2013. South Africa's crippling five-month strike in the platinum belt has lifted palladium prices by more than 15 percent this year, outpacing gains in platinum which is up just six percent.
NO GOLD RALLY DESPITE IRAQ Spot gold was up 0.2 percent at $1,275.39 an ounce. US COMEX gold futures for August delivery settled up 10 cents at $1,274.10 an ounce. The metal, however, has not risen further following Thursday's 1-percent gain.
On Friday, Iraq's most senior Shia Muslim cleric urged followers to take up arms against a full-blown Sunni militant insurgency to topple Shia Prime Minister Nuri al-Maliki, escalating a conflict that threatens civil war and a possible break-up of the country. "The general thought out there is that what's going on in Iraq will be contained and should not create a significant impact globally by affecting oil production," said Mike Meyer, assistant vice president at EverBank World markets in St. Louis.
Silver rose 0.7 percent to $19.63 an ounce.
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