March 19, 2019 / 4:02 AM / 9 months ago

PRECIOUS-Palladium hits record high as supply woes mount on likely Russia ban

* Palladium hits a record high of $1,594/oz

* Gold edges up for a third consecutive session

* SPDR gold holdings post biggest daily gain since Jan. 18 (Updates prices)

By K. Sathya Narayanan and Swati Verma

March 19 (Reuters) - Palladium surged to a record on Tuesday as the risk of a ban on some Russian exports added to supply concerns for the autocatalyst metal, while gold rose on expectations the U.S. Federal Reserve will stay dovish at its meeting this week.

Spot palladium was up 0.2 percent at $1,586.92 an ounce as of 0814 GMT, and was within striking distance of the $1,600 level after registering an all-time high of $1,594 earlier in the session.

“The market is in uncharted territory and on the fundamental side the ban from Russia has supported the prices,” said Ajay Kedia, director at Kedia Commodities in Mumbai.

“Though there are concerns that auto sales are falling, the supply deficit problem is offsetting it,” he said, adding the market is highly overbought.

The price of the metal has nearly doubled since mid-August and is up about 26 percent so far the year.

Russia, a major producer of palladium, is mulling a ban on the export of precious metals scrap and tailings to promote domestic refining of the materials.

On the demand side, expectations for more economic stimulus by China, the world’s biggest auto market, could be a short-term driver for the already tight market, said Ilya Spivak, a senior currency strategist at DailyFX.

Meanwhile, spot gold gained 0.1 percent to $1,304.86 per ounce, as the dollar languished near two-week lows hit in the previous session on growing expectations the Fed would shift to a more accommodative policy stance.

U.S. gold futures rose about 0.2 percent to $1,304.60.

“Gold has been edging up and the main driver is a softening dollar,” said Margaret Yang, a market analyst with CMC Markets, Singapore. The Fed decision and Brexit vote could be gold boosters in the short term, she added.

The U.S. central bank will start its two-day meeting on interest rates later in the day.

If the Fed is more dovish than expected, the dollar is likely to move lower and in turn support gold prices, while uncertainty surrounding Brexit has increased demand for safety, Yang said.

Prime Minister Theresa May’s Brexit plans were thrown into further turmoil on Monday when the speaker of parliament ruled that she could not put her divorce deal to a new vote unless it was re-submitted in a fundamentally different form.

Gold is often used as a hedge against political and financial uncertainties.

Indicative of investor sentiment, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose about 1.1 percent on Monday, its biggest one-day percentage gain since Jan. 18.

In other precious metals, silver slipped 0.6 percent to $15.35 per ounce, while platinum gained 0.8 percent to $836.81 per ounce.

Reporting by K. Sathya Narayanan and Swati Verma in Bengaluru; Editing by Richard Pullin and Shreejay Sinha

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