Palladium soars 11% as UK trade body says it will block Russian imports

Palladium rose 11% on Friday on renewed supply concerns after a market authority said it would block Russian refineries from selling the metal in London due to the Ukraine crisis.

Palladium, used by carmakers in catalytic converters to curb emissions, hit its highest since March 25 at $2480.42/oz following the announcement by the London Platinum and Palladium Market (LPPM), a trade association that accredits refineries.

"It triggers some renewed concern as we have seen in the past about supply disruption in an environment of a tight market … the longer term outlook will still be dependent on how much [palladium] can be redirected to other places," said UBS analyst Giovanni Staunovo.

Palladium rose 8% to $2,413.46/oz at 2.37pm GMT), en route to its first weekly gain in five. The metal surged to a record high of $3,440.76/oz on March 7 on concerns over supply from top producer Russia. Spot gold rose 0.67 % to $1,945.21/oz and was up 1.1% for the week, benefiting from safe-haven inflows triggered by the continued Ukraine conflict, and inflation concerns.

US gold futures rose 0.2% to $1,942.30/oz. Gold's gains came despite solid gains in the dollar, a rival safe-haven asset. "The opposing forces of inflation and rising rates will likely be the strongest influences on gold in the second quarter," the World Gold Council wrote in a report.

"The post-Covid-19 economic recovery and supply side disruptions, which have been exacerbated by the Russia–Ukraine war, will likely keep inflation higher for longer."

While gold is considered a refuge asset during global conflicts and rising inflation, higher US interest rates increase the opportunity cost of holding the nonyielding bullion.

Silver rose 0.5% to $24.69/oz, heading to a weekly rise of 0.3%, and platinum was up 1.7% to $979.06/oz, on track for its fifth weekly dip. 

Reuters