Palladium rises as Russia sanctions cloud supply outlook, gold jumps

March 1, 20227:23 PM UTCUpdated ago

Summary
Companies

Wall Street slips as Russia-Ukraine crisis escalates
Benchmark Treasury yields down to five-week low
Palladium hits highest level since July 23

March 1 (Reuters) - Palladium surged to a seven-month peak on Tuesday as Western sanctions against Russia over its invasion of Ukraine raised supply concerns, while tensions surrounding the crisis also bolstered demand for safe-haven gold.

The auto-catalyst metal jumped as much as 9.4% to $2,722.79 per ounce in the session and was up 3.4% at $2,572.23 by 2:02 p.m. ET (1902 GMT).

"There is tremendous concern that Russia, a key exporter of palladium, is going to face severe disruptions as the flight bans are going to impose a big trouble in getting supplies to different places," said Edward Moya, senior market analyst at OANDA.

"Palladium market already has tight inventories and now the geopolitical risks are going to lead to severe supply shortages."

Russia is the biggest producer of palladium, with Moscow-based Nornickel (GMKN.MM) accounting for 40% of the metal's global mine production last year. read more

Gold jumped 1.8% to $1,941.51 per ounce as the crisis drove investors to safe-haven assets.

U.S. gold futures settled up 2.3% at $1,943.80.

Wall Street slipped and oil prices jumped back above $100 a barrel as a Russian armoured column bore down on Ukraine's capital, Kyiv, on Tuesday. read more

"Bond yields have fallen as prices have recovered on safe-haven flows and with some investors reducing their expectations about aggressive tightening from central banks. Against this backdrop, I am expecting gold to go well north of $2,000," Fawad Razaqzada, an analyst with ThinkMarkets, wrote in a note.

Gold is considered a safe store of value during such uncertainties and also a hedge against rising inflation.

Investors were also anticipating Federal Reserve Chair Jerome Powell's testimony before the U.S. Congress on Wednesday and Thursday for more clarity on interest rate hikes amid the Ukraine tensions and soaring inflation. read more

Spot silver rose 3.9% to $25.38 per ounce and platinum gained 0.9% at $1,052.84.

Reporting by Brijesh Patel in Bengaluru; Editing by Paul Simao and Devika Syamnath