By Swati Verma
(Reuters) – 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, aggravating supply risks to palladium and powering prices of the autocatalyst to a seven-month high.
Spot gold was up 1% at $1,926.51 per ounce at 1:31 pm ET (1831 GMT), having earlier touched its highest level since September 2020 at $1,973.96. U.S. gold futures settled 0.8% higher at $1,926.3.
Traders attributed the retreat from the session highs to increased liquidity during U.S. trading hours as equities attempted to recoup some of their steep declines. [.N]
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.
Palladium rose 1.2% to $2,512.82 an ounce, having earlier hit its strongest level since July at $2,711.18.
“Potential disruptions could have a far more significant market impact on the PGMs (Platinum Group Metals), particularly given expectations that easing supply-chain challenges in H2, 2022 and a recovery in auto production will support increasing auto-catalyst demand,” said Standard Chartered analyst Suki Cooper.
Russia’s Nornickel is the world’s largest supplier of palladium and a major supplier of platinum, both used by automakers in catalytic converters to clean car exhaust fumes.
Platinum dropped 3.5% to $1,053, seeing a relatively volatile session after rallying to as high as $1,126.18. Silver gained 0.4% to $24.61 per ounce.
“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. [O/R]
The deficit-hit palladium market could squeeze towards $3,000, Wong said.
Graphic: Gold, palladium soar as Russia invades Ukraine- https://fingfx.thomsonreuters.com/gfx/ce/lgvdwawrqpo/Gold%20and%20palladium%20prices%20spike.png
(Reporting by Swati Verma and Seher Dareen in Bengaluru; Editing by Amy Caren Daniel)
