Palladium benefits from escalating Ukrainian crisis

Bengaluru — Palladium rose on Wednesday, extending gains after hitting a seven-month peak in the previous session as the Russia-Ukraine crisis worsened, while gold fell after the dollar strengthened.

Autocatalyst metal palladium rose 0.5% to $2,593.28 by 4.11am GMT. Russia accounts for 40% of palladium production globally.

“The kind of shortages or price jumps we’ve seen in vehicles around these supply-chain and shipping disruptions, not surprising that palladium was already edging higher,” said Ilya Spivak, a currency strategist at DailyFX.

The war and the sanctions imposed by Western nations on Russia significantly cut off access to Russian palladium supply, Spivak said. “There’s a risk premium and supply disruption element that’s being factored in here.”

Ukraine’s besieged cities were bracing for more attacks on Wednesday, as Russian commanders facing fierce Ukrainian resistance intensify their bombardment of urban areas in a push towards the capital Kyiv. The steady drum beat of US companies taking a stance increased as rockets struck major cities in Ukraine.

Spot gold was down 0.4% to $1,935.84/oz. US gold futures fell 0.3% to $1,938.50. The dollar index held close to a 20-month high touched on Tuesday, making gold less attractive for holders of other currencies.

Investors now await Federal Reserve chair Jerome Powell’s testimony before the US Congress for more clarity on interest rate hikes.

“If we find out mid-month that from the Fed’s perspective, the current situation is not going to change their overall strategy, that they’re still focused on containing inflation -you’re going to see gold snap back lower in a significantly sharp move,” Spivak said.

Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 1,042.38 tonnes on Tuesday — the highest since July 2021.

Spot silver fell 1.1% to $25.09/oz, while platinum was flat at $1,052.66. 

Reuters