Palladium futures reached the highest price in almost three years after government-led talks with the union leading a pay strike in South Africa failed. Platinum climbed to a two-week high and gold was little changed.
More than 70,000 mineworkers have been on strike since January in South Africa, the largest producer of platinum and the second-biggest for palladium.
Negotiations overseen by Minister of Mineral Resources Ngoako Ramatlhodi with the Association of Mineworkers and Construction Union ended without a resolution. Producers will consider steps to end the strike.
Palladium gained 18 percent this year and platinum rose 7.2 percent as the South African labor strike cost companies about 22 billion rand ($2.1 billion).
Demand for the metals, which are mainly used in pollution-control devices in vehicles, will exceed supply for a third successive year, Johnson Matthey Plc (OTC: JMPLY)data show.
Holdings in platinum- and palladium-backed exchange- traded products are at records, data compiled by Bloomberg show.
“The strike still remains unresolved and this could rumble on for some time,” Robin Bhar, an analyst at Societe Generale SA in London, said by phone Tuesday.
“That will gradually tighten up supply. There’s quite a bullish outlook from the demand side” as consumption by car companies increases, he said.
Palladium for September delivery rose 0.8 percent to $847.95 an ounce by 7:31 a.m. on the New York Mercantile Exchange. It touched $849.40, the highest since Aug. 1, 2011.
Futures trading volume was 16 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
The metal for immediate delivery gained 0.5 percent to $847.78 in London, according to Bloomberg generic pricing. It reached the highest since February 2011 earlier Tuesday.
Platinum for July delivery was 1.2 percent higher at $1,472.30 an ounce in New York. It reached $1,473.80, the highest since May 27.
Repeated attempts have failed to engineer a breakthrough in the dispute that has idled 60 percent of output in South Africa. The talks that ended Monday were to be the last led by the government, according to Ramatlhodi.
The chances of job cuts at mines are rising, he said. The AMCU will meet with members starting Tuesday to get views on how to respond to the outcome of talks, AMCU leader Joseph Mathunjwa said.
Palladium demand will beat supply by 1.6 million ounces this year and platinum’s shortage will total 1.2 million ounces, both the most ever, according to Johnson Matthey data.
Gold slipped in May as tension eased between Ukraine and Russia and as the euro weakened on speculation that the European Central Bank would add to stimulus.
Data this week may show U.S. retail sales rose after Federal Reserve Bank of Boston President Eric Rosengren said Monday economic growth will be stronger in the second half.
Bullion slid 28 percent last year on expectations the Fed would slow bond purchases.
Gold for August delivery was little changed at $1,254.90 an ounce on the Comex in New York. It reached a four-month low of $1,240.20 on June 3. Silver for July delivery lost 0.2 percent to $19.035 an ounce.
“Gold appears to be steadying after the May slump,” Howard Wen, an analyst at HSBC Securities (USA) Inc., wrote in a note. “We do expect the recent price decline to encourage some emerging market bullion demand but we do not believe this has fed into more stable gold prices, at least not yet.”