Sharp falls in the value of the South African rand has added to pressure on palladium and platinum prices this week, lowering costs for mining companies operating in the world's largest producer, which could lead to a rise in production.
Although having recovered just over 0.50% in early trade Thursday, the rand has lost over 5% against the dollar since the start of the week on concerns the finance minister, Pravin Gordhan, was to be forced out by President Zuma in an imminent cabinet reshuffle.
The decision to recall Gordhan from London Monday preceded the sharp fall in the rand. Gordhan has led a drive to force out cronyism in the country's economy and build up investor confidence.
"Gordhan is regarded as a guarantor of a stability-oriented policy aimed at rebalancing the country's public finances, which have spiralled out of control, and at boosting South Africa's weak economy through [foreign] investment," Commerzbank said in a note Thursday.
"The weaker currency reduces costs for mining companies, meaning that more platinum and palladium could be produced again in South Africa."
South Africa is the largest producer of both metals, responsible for around 75% of global platinum supply and 40% of world palladium supply.
Platinum prices are largely unchanged on the day, at around $955/oz at 1000 GMT, but are down close to 2.5% since Monday.
Having hit two-year highs Friday above $813/oz, palladium is down as much as 3% week on week at $788/oz at 1000 GMT.
Palladium's recent gains were due to strong industrial demand, in particular positive data from the automotive sector, which accounts for around 80% of palladium demand.
According to LMC Automotive, global car sales are expected to grow by 2.5% this year, up from previous estimates of 1.3%.
This includes a revision to its forecast in China, where a reduction in tax breaks is expected to have less of an impact on car sales than originally feared, and should see an increase in sales of 2.1% in 2017.
The price differential between palladium and platinum has decreased significantly this year. At around $165/oz currently, but falling to as little as $155/oz in recent weeks, it is the smallest price difference since 2002.
The platinum and palladium ratio has fallen below 1.20 in recent days, also its lowest since 2002.
