Palladium bounces off three-week high as dollar advances

Palladium prices fell nearly one percent in American trade away from February 2 highs for the second session out of three, as the dollar index rose for the fourth straight session away from December 17, 2014 lows, ahead of US manufacturing, services, and housing data, in addition to the Federal Reserve's meeting minutes. 

As of 02:20 GMT, palladium fell 0.88% to $1,028.07 an ounce from the opening of $1,037.18, while the dollar index rose 0.13% to 89.84 from the opening of 89.72. 

Investors await the Federal Reserve's minutes of the January 30-31 meeting, at which policymakers votes to hold interest rates unchanged between 1.25% and 1.5%. 

At the last meeting under Janet Yellen, policymakers asserted the path of policy tightening and three rate hikes this year, while expanding the plans of normalizing the balance sheet. 

Markets in particular look forward to the Fed's March 20-21 meeting, the first under new Chair Jerome Powell, at which policymakers will release their three-year forecasts for inflation, unemployment, growth, and interest rates. 

Palladium, one of the rarest metals on earth - 30 times rarer than gold- managed to reverse the march away from record highs as dollar gave up ground, while noting that Russia and South Africa provide over 75% of global palladium supplies. 

Otherwise, Standard Chartered recently projected a supply deficit of 563 thousand ounces in the palladium market this year, compared to a deficit of 459 thousand in 2016, while expecting upbeat gains throughout the ongoing 12 months, which was reflected in palladium's surge to record highs recently.