Palladium rose on Thursday (March 3), extending gains amid the deepening Ukraine crisis in the wake of sanctions imposed on Russia by the U.S. and Western countries set to disrupt exports of the precious metal.
The auto-catalyst metal jumped 2% to $2,721.78, after hitting a fresh high since July at $2,735.18 earlier in the session.
Palladium is usually transported by passenger planes and Russia is the biggest producer of palladium, with Moscow-based Nornickel accounting for 40% of the metal’s global mine production last year.
“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,” Edward Moya, senior market analyst at OANDA told Reuters earlier this week. “Palladium market already has tight inventories and now the geopolitical risks are going to lead to severe supply shortages.”
Meanwhile, safe-haven gold held its ground at $1,926.10 per ounce by 0726 GMT. U.S. gold futures rose 0.4% to $1,930.50. Spot silver added 0.3% to $25.34 per ounce, while platinum rose 1.3% to $1,085.35.
Gold is considered a safe investment during political and economic uncertainty, but it is highly sensitive to rising U.S. interest rates, which increases the opportunity cost of holding bullion.
US Federal Reserve Chair Jerome Powell told the House Financial Services Committee the central bank still believes it will be appropriate to raise interest rates later this month, citing inflation well above 2% and a strong labor market. The likely increase in interest rates comes even though Powell acknowledged that the Russia-Ukraine conflict has introduced significant uncertainty for the U.S. economic outlook.
One million people have fled Ukraine since Russia launched its military operation in the country last week, data provided by the United Nations showed.
As tensions remain high over the Russia-Ukraine crisis, oil and material prices continue to spike. In the morning of Asia trading hours, international benchmark Brent crude jumped 4.4% to $117.80 per barrel, after earlier rising as high as $118.22 per barrel. U.S. crude futures also climbed 4% to $115 per barrel.