The South African platinum producer, Implats, has suggested that investment fund buying will boost the price of palladium over the short-term but this will be offset by sales of Russian reserves.

According to Reuters, the marketing director of Implats, Derek Engelbrecht, explained that Russian suppliers had released nearly two million ounces of palladium into the market in an attempt to benefit from increasing prices driven by investment fund demand for the metal.

However, he added that the Russian authorities were likely to maintain this strategy to prevent the market from overheating and prevent the price of palladium soaring to unsustainable levels.

Last month, Palladium prices reached an 11-month high of around $250 per ounce.

Mr Engelbrecht stated: 'I think they will try to release metal into any market strength that arises from fund buying...I don't think the Russians want the price to run away.'

He added that while prices were being driven up by speculative buying on behalf of the funds, the market is over-supplied.

'We don't believe the fundamentals are supportive of current price levels. We find there are other factors - there are high inventory levels (and) we think demand is relatively anaemic,' the Implats marketing director stated.

The weak long-term outlook contrasts with positive forecasts for platinum, which has achieved 24-year highs on the back of fears over poor supply.