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Palladium, platinum soar on South Africa lockdown; gold jumps

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·2 min read
Ingots of 99.97 percent pure palladium are stored at a plant of Krastsvetmet in Krasnoyarsk
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  • PL=F
  • GC=F
  • ZG=F
  • PA=F

By Sumita Layek

(Reuters) - Palladium soared as much as 15% on Tuesday, on track for its biggest daily gain since 2001 as major producer South Africa was locked down due to the coronavirus outbreak, while U.S. gold futures surged over 4% as fresh stimulus stopped a cash hunt among investors.

Palladium jumped 11% to $1,907.31 per ounce by 11:03 p.m. EDT (1503 GMT), while platinum gained 6.6% to $684.80.

"The market focus is starting to turn to some of these supply disruptions that the virus brings. South Africa is clearly the main one," said Saxo Bank analyst Ole Hansen.

"So, the focus has shifted somewhat from the risk to having a major drop in demand to the equally challenging condition where we've supplies struggling to find its way through to the buyer of the metal."

Platinum prices were set for their biggest daily gain since 2008.

"The country accounts for some 70% of global platinum mined supply and 35% of palladium, with a 21-day lockdown possibly resulting in a 4% and 2% of 2020 supply reduction respectively," said Dmitry Glushakov, Head of Metals & Mining Research at VTB Capital.

Spot gold was up 3% at $1,599.31 per ounce, while U.S. gold futures climbed 4.2% to $1,633.90.

The price difference between spot gold and U.S. gold futures widened to as much as $65 during the session as a rush of buying met with poor liquidity in the London market.

"The massive Fed stimulus and QE program continues to support gold as it erodes the currency (U.S. dollar). Hard assets are going to be in vogue in that environment," said David Meger, director of metals trading at High Ridge Futures.

"The pressure is lifted, we're no longer seeing the indiscriminate selling, to the contrary, we're seeing the cream rise to the top."

Wall Street jumped at the open on signs that Washington was nearing a deal on a $2 trillion economic rescue package.

The Fed announced unlimited quantitative easing and programmes to support credit markets on Monday. The move triggered a dip in the dollar.

Also helping bullion, three of the world's largest gold refineries said they had suspended production in Switzerland for at least a week to curtail the spread of the contagion.

Meanwhile, U.S. business activity contracted further in March, hitting a record low as the coronavirus pandemic depressed activity in both the manufacturing and services sectors.

Silver rose 4.3% at $13.83 to a one-week high.

(Reporting by Sumita Layek in Bengaluru and Peter Hobson in London; Editing by David Gregorio)