Palladium and gold advance as West heaps sanctions on Russia

NEW YORK (Feb 28) - Palladium jumped over 7% on Monday as fresh Western sanctions on Russia exacerbated supply concerns for the auto-catalyst, while gold firmed en route to its best month in nine on strong safe-haven demand due to the Ukraine crisis.

Palladium gained 4.8% to $2,479.37 by 1120 GMT, having scaled a session high of $2,551.50, and was set for a third consecutive monthly rise. Russia's Nornickel is the world's largest supplier of palladium, used by automakers for catalytic converters.

Palladium is seeing big gains in response to the events over the weekend, said Craig Erlam, senior market analyst at OANDA adding that there is an increased risk of disruption to supplies which continues to lift prices as the conflict escalates.

Russia's central bank on Monday moved to shield the economy from unprecedented Western sanctions as its invasion of Ukraine continued, bolstering other measures including an assurance it would resume buying gold in the domestic market.

Goldman Sachs expects a rally in commodities that Russia is a major producer of, as the West stepped up political and economic restrictions on Moscow.

Spot gold rose 1% to $1,907.08 per ounce, after gaining as much as 2.2% earlier in the session. U.S. gold futures advanced 1% to $1,907.10. Gold has risen about 6% so far in February in what would be its best monthly gain since May 2021, after prices soared to an 18-month high of $1,973.96 last week.

"As long as the Ukraine crisis persists, gold prices should have little trouble staying above $1,900, with a strong bias for further strides towards $2,000 if this geopolitical crisis further escalates," Han Tan, chief market analyst at Exinity said.

"Gold bulls have fed off Europe's worst security crisis in decades, turning the precious metal into the top-performing safe-haven." Spot silver rose 0.8% to $24.39 per ounce and platinum added 0.8% to $1,062.92, with both poised for monthly gains.

REUTERS