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Palladium Shoots To An All-Time High Amid Fears Of Scarcity

Derek Wolfe

Updated: March 8, 2022

palladium high
Editor’s Note:

EDITOR'S NOTE: Palladium prices just hit an all-time record of $3,440.76 an ounce before pulling back to levels that are still historically elevated. This palladium high shouldn’t be much of a surprise considering that Russia is the world’s largest palladium producer and that western sanctions disrupted the supply picture. Today, nickel, another metal to which Russia is the main exporter, rose to over $100,000 a ton. Since the start of the Russia-Ukraine war, the metal has risen 320%. Nickel is used primarily to make coins in addition to other products like gas turbines, rocket engines, and other alloys. In contrast, palladium is a critical component in the production of catalytic converters among other multi-industry products. The impact of war in Eastern Europe is likely to be more far-reaching than most people expect. In other words, global inflation was already troubling, to begin with prior to the Russian invasion. Now, the impact it will have on your wealth is likely to be severe. This is why sound money proponents invest in physical gold and silver: to protect against a major plunge in purchasing power, as we’re seeing now. 

(Reuters) - Palladium shot to an all-time high as Russia's invasion of Ukraine and resultant sanctions stoked fear of scarcity, while gold tested the psychological $2,000 mark in response to demand for safe-haven assets.

Spot palladium was up 10.2% at $3,308.49 per ounce by 1216 GMT, on course for its biggest daily percentage rise since March 2020 having hit an all-time high of $3,440.76 earlier.

"Palladium is reflecting deep scarcity, and anticipation of further scarcity as things unfold in Ukraine and Russia," independent analyst Ross Norman said, adding he expected the price rally to continue.

Western nations have piled sanctions on Moscow, driving prices higher across a range of commodities. Russia accounts for 40% of global production of palladium, used by automakers in catalytic converters to curb emissions.

"Possible supply outages from Russia are still being priced in on the palladium market," Commerzbank analysts said in a note. "As supply outages could not be offset elsewhere, the market risks sliding into a sizeable supply deficit."

Spot gold gained 1% to $1,988.46 per ounce, after scaling its highest since Aug. 19, 2020 at $2,002.31 earlier in the session. U.S. gold futures rose 1.3% to $1,991.30.

"The severity of the war in Ukraine and the uncertainty around its future trajectory have fuelled broad-based gold buying from safe-haven seekers, pushing prices towards $2,000 per ounce," Julius Baer analyst Carsten Menke wrote in a note.

"A further escalation would likely lift prices further. The latter would likely have a more lasting impact, as it could push the world economy towards a stagflation scenario, which we see as very bullish for gold."

Bullion is considered a safe store of value during such uncertainties and also a hedge against rising inflation.

"In the current environment, I would expect $2,000 to represent little more than a speed bump," Norman said.

Silver gained 0.3% to $25.74, while platinum was up 2% to $1,143.08.

(Reporting by Bharat Govind Gautam in Bengaluru, additional reporting by Brijesh Patel; editing by Barbara Lewis and Krishna Chandra Eluri)

By Bharat Gautam

Originally published on Reuters.

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