Gold jewellery Image Credit: Gulf News archives

London: Palladium scaled a record peak on Wednesday due to a prolonged supply deficit, while gold slipped as the dollar gained ground ahead of a policy decision by the US Federal Reserve.

Spot palladium was down 0.3 per cent at $1,591.50 (Dh5,840.80) an ounce, as of 0908 GMT, after hitting an all-time high of $1,606.76 earlier in the session.

Platinum was 1.3 per cent firmer at $856.75 an ounce, after touching its highest since March 4 at $858.64 earlier in the session.

“Palladium market is definitely driven by constraints on the supply side and the possibility of a ban from Russia will keep palladium in particular, and platinum to an extent, extremely well bid,” said Jeffrey Halley, a senior market analyst with OANDA.

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.

Palladium and its sister metal platinum are used in emissions-cutting autocatalyst, but palladium is used more in gasoline engines.

Palladium prices have nearly doubled since mid-August and are up about 27 per cent so far this year.

Meanwhile, gold prices dipped as the dollar firmed, making bullion expensive for holders of other currencies.

Spot gold was down about 0.4 per cent at $1,301.38 per ounce. US gold futures slipped 0.4 per cent to $1,301.7.

“The firm dollar and gains in equities are headwinds for gold today and currently the risk appetite is slightly high,” said Benjamin Lu, an analyst with Singapore-based Phillip Futures.

Asian shares were trading near six-month highs ahead of a policy decision by the Fed.

The Fed is due to make its rate announcement at 1800 GMT, followed by a news conference by Chairman Jerome Powell.

Considering the recent US economic data, the market expects the Fed to hold interest rates unchanged and shed more light on its monetary policy plan for the rest of the year, said Hareesh V, head of commodity research at Geojit Financial Services.

Data on Tuesday showed new orders for US-made goods rose less than expected in January and shipments fell for a fourth straight month, offering more evidence of an economic slowdown.

The dollar rose against its key rivals on reports of renewed tension in US-China trade negotiations. Investors since last year have favoured the dollar as a safe haven amid the Sino-US trade tensions.

Worries surrounding the trade row might add some pressure on the yellow metal, Phillip Futures’ Lu said.

Spot silver dipped 0.5 per cent to $15.27 an ounce.