Gold hit a more than one-and-half year high on Thursday as investors sought cover in the safe-haven metal after Russia invaded Ukraine and aggravated supply risks to palladium, powering prices of the autocatalyst to a seven-month high.
Palladium climbed 6% to $2,631.95 an ounce at 10:27 am EST (1527 GMT) having hit its highest level since July at $2,711.18 earlier.
Spot gold rose 0.6% to $1,919.30, having touched $1,973.96 earlier, its highest since September 2020. US gold futures added 0.6% to $1,921.
"As long as the breadth and length of the conflict remains uncertain, I don't see investors wanting to sell any of these Russia sensitive metals or energy," said Tai Wong, an independent metals trader in New York.
Spot gold may fall into $1,879-$1,886 range
Gold prices eased from their session highs, which traders attributed to increased liquidity into US trading hours as equities attempted to recoup some of its steep declines.
Russia's Nornickel is the world's largest supplier of palladium and a major supplier of platinum, accounting for about 40% and 10% of the global mine production, respectively.
Traders say the market is worried that sanctions on Russia imposed by the United States could significantly tighten supplies of palladium used to make autocatalysts.
The deficit-hit palladium market could squeeze towards $3,000, Wong said.
The assault on Ukraine was the biggest attack by one state against another in Europe since World War Two.
"It's more than what the market was anticipating," said RJO Futures senior market strategist Bob Haberkorn.
"If Russia in fact does take Kiev and the international community has an aggressive response, gold will trade up over $2,000 fairly quickly" and the least path of resistance is up because there are just so many unknowns right now, Haberkorn added.
Silver added 0.5% to $24.65 per ounce. Platinum fell 1.2% to $1,079, seeing a relatively volatile session after rallying to as high as $1,126.18.
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