Palladium Breaks $1,000 Mark as Gold Holds Steady on Fed Easing Speculation

Gold prices increased on Thursday, driven by expectations of a U.S. Federal Reserve interest rate cut next week. Meanwhile, supply concerns from Russia, the world’s largest palladium producer, pushed palladium above the key $1,000 per ounce level. Spot gold was up 0.1% at $2,513.78 per ounce by 1107 GMT, supported by the 21-day moving average of $2,505.

The marginal rise in U.S. consumer prices in August, coupled with underlying inflation concerns, has led to expectations that the Fed may opt for a smaller 25-basis-point cut at its upcoming meeting. Despite the possibility of a smaller reduction, the anticipated easing cycle is bolstering gold prices.

"Even with a smaller rate cut expected, the Fed's shift towards easing is keeping upward pressure on gold," said Alexander Zumpfe, a precious metals trader at Heraeus Metals. He added that inflation concerns, along with strong demand from central banks, support a bullish outlook for gold through the rest of the year.

Traders are awaiting the U.S. Producer Price Index (PPI) for August and the initial jobless claims report, both due later Thursday, to gain further insight into the Fed’s policy direction.

Palladium gained 1.1% to $1,019.75 per ounce, reaching an earlier high of $1,030.68—its highest since July 8. Supply concerns were sparked after Russian President Vladimir Putin suggested Moscow might limit exports of metals such as uranium, titanium, and nickel. While palladium was not directly mentioned, its production is tied to Russian nickel output, raising concerns about reduced supply.

"Palladium is poised for a short-covering rally," said Nitesh Shah, commodity strategist at WisdomTree. He explained that any restrictions on nickel exports could further decrease palladium production, exacerbating the current market deficit.

Russia’s Nornickel, the world’s largest producer of palladium and a significant platinum producer, accounts for 41% of global palladium output and 12% of platinum production. The palladium market is expected to face a deficit of 450,000 ounces this year, according to Heraeus.

Other precious metals saw modest gains, with spot silver adding 0.1% to $28.72, and platinum rising 0.4% to $955.30 per ounce.