Palladium extended gains on Friday, pushing past $2,800 an ounce on its way to its best week in two years as fears rose over a Russian supply shortage and the war in Ukraine kept safe-haven gold on solid ground.

Spot palladium was up 0.8% to $2,797.53 as of 1025 GMT after peaking since July 2021 at $2,835.48. This week it was supposed to rise by 18%, which will be the best performance since the end of March 2020.

Russia accounts for 40% of the global production of the autocatalyst metal used in catalytic converters to control vehicle emissions.

“The Russian invasion of Ukraine somehow contributes to (the palladium supercycle) and reinforces it. But this is what started with the easing of COVID restrictions…and the increase in demand for commodities,” said ActivTrades Senior Analyst Ricardo Evangelista.

Having blunted their appetite for riskier assets, Western countries have imposed sanctions on Russia as its invasion of Ukraine continued. [MKTS/GLOB]

“Buyers strike on almost everything that comes from Russia. Palladium is no exception,” said Stephen Innes, Managing Partner at SPI Asset Management.

The resulting safe-haven demand helped gold, which gained about 3% over the week, helping it largely ignore the dollar’s rise throughout the crisis and the imminent U.S. Federal Reserve rate hike.

“While the Fed will have to tread ‘cautiously’ given the situation in Ukraine, this confirmation of an interest rate hike places a ceiling on gold, and its low yields make it less attractive in a rising interest rate environment,” Rupert said. Rowling, market analyst at Kinesis Money, in a note.

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Spot gold rose 0.5% to $1944.20 an ounce, while US gold futures jumped 0.6% to $1947.40.

Spot silver added 0.1% to $25.18 an ounce and was set to rise for the fifth week in a row. Platinum fell 0.2% to $1,078.28.

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