By Frank Tang and Clara Denina
NEW YORK/LONDON (Reuters) - Palladium rallied to its highest level since early 2001 on Wednesday, as lingering supply worries due to a five-month strike in South Africa prompted investor buying.
Palladium has risen 20 percent so far this year, underpinned by a crippling strike in South Africa, the world's No. 2 producer of the metal, which took out a significant portion of the world's output in platinum group metals (PGM).
A fresh round of wage settlement talks between the main mine workers' union and major PGM producers broke down on Monday, sparking palladium's 2 percent spike so far this week.
Spot palladium hit a peak of $862.50 an ounce on Wednesday, its highest level since February of 2001. The metal rose 0.8 percent to $859.75 an ounce by 3:22 p.m. EDT (1922 GMT). U.S. NYMEX palladium contract for September delivery settled up $5.60 at $860.15.
Also Read
"There is no prospect about resolving the strike any time soon. We are going to see continued labor unrest leading to higher prices," said Jeffrey Sica, chief investment officer of Sica Wealth which manages over $1 billion in client assets.
Palladium is used in catalytic converters to clean exhaust emissions, most heavily in gasoline-powered vehicles.
Platinum, which gained 2 percent in the previous session, was up 0.4 percent at $1,479.10.
On Tuesday, South Africa's Impala Platinum, the world's No.2 producer of the precious metal, said it had nothing more to offer to resolve the walkout.
Among other precious metals, gold inched down 14 cents to $1,260.35 an ounce, holding above a four-month low of $1,240.61 hit last week.
U.S. COMEX gold futures for August delivery outperformed spot to settle up $1.10 at $1,261.20 an ounce.
Investment interest in bullion was low as trading volume was under 80,000 lots, about half of gold's 30-day average at 160,000 lots, preliminary Reuters data showed.
Silver edged up 0.2 percent to $19.15 an ounce.
(Additional reporting by Lewa Pardomuan in; Singapore; Editing by Jeremy Gaunt and Diane Craft)
