PRECIOUS-Palladium heads for its best day since 1997 on S. Africa lockdown

(Recasts, adds comments, updates prices)
* Palladium surges nearly 25%
* Spot gold hits two-week high
* Markets await vote on U.S. stimulus bill

By Sumita Layek
March 25 (Reuters) - Palladium prices rocketed on Wednesday,
on track for their best daily gain since 1997, as a lockdown in
major producer South Africa exacerbated supply woes, while gold
inched up as markets eyed U.S. stimulus.
Deficit-hit palladium rose as much as 24.8% earlier and was
last up 19.3%, at $2,304.74 an ounce, as of 1:51 p.m. EDT (1751
GMT).
"Palladium is soaring on heightened supply concerns
... (South Africa's lockdown) will make an already tight supply
situation much worse," said Edward Moya, a senior market analyst
at broker OANDA.
The auto-catalyst metal rose 10% in the previous session on
concerns of mine closures, though South Africa said on Wednesday
it would continue to process platinum group metals during the
lockdown. The price rise "looks like short positions squeeze on the
sentiment from South African mines closure. ... (A) 21-day mines
closure would mean 2% global supply cut for 2020, while the
magnitude of car sales drop for the year remains unclear,"
Dmitry Glushakov, head of metals and mining research at VTB
Capital.
Spot gold XAU= inched up 0.1% to $1,612 per ounce in
volatile trade, after earlier hitting a two-week high. Prices
surged as much as 5% on Tuesday.
U.S. gold futures GCcv1 settled 1.5% lower at $1,634.90 an
ounce, a day after posting their biggest one-day jump since
2009.
"It's very volatile because we have a coronavirus-hit gold
market now, we've got supplies from three of the biggest
refiners offline in Switzerland and gold is not in the right
place where it is needed. So it's creating a lot of
nervousness," said Saxo Bank analyst Ole Hansen. The benchmark spot gold prices traded below U.S. gold
futures in a sign the market is worried that air travel
restrictions and refinery closures will hamper shipments of
bullion to the United States to meet contractual requirements.
U.S. exchange operator CME Group CME.O on Tuesday
announced a new gold futures contract to combat price volatility
caused by the shutdown of gold supply routes, but traders and
bankers said it would not immediately calm markets. Investors were awaiting the U.S. Senate's vote later in the
day on a $2 trillion package to alleviate the economic impact of
the coronavirus pandemic. The virus has infected nearly 423,000 people, forcing
lockdowns across the globe to combat its spread and has prompted
countries and central banks worldwide to step in with policy
aids. Platinum XPT= jumped 4.4% to $739.09 an ounce, while
silver XAG= rose 1.5% to $14.49.