By Arpan Varghese
(Reuters) - Palladium extended gains on Friday, breaking above $2,800 an ounce mark en route to its biggest weekly gains in two years as concerns grew about supply shortfalls from Russia, while the war in Ukraine kept safe haven gold on firm ground.
Spot palladium rose 4.1% to $2,889.70 as of 1252 GMT, after going as high as $2,835.48, a peak since July 2021.
Russia accounts for 40% of global production of the auto-catalyst metal, which was headed for an 21.9% rise this week: its best since late March 2020, and fourth weekly rise.
"The Russian invasion of Ukraine somehow contributes to (the palladium supercycle) and reinforces it. But it's something that started with the fizzling out of the COVID lockdowns ... and increase in demand for raw materials," ActivTrades senior analyst Ricardo Evangelista said.
Dimming appetite for riskier assets, Western nations imposed sanctions on Russia.[MKTS/GLOB]
There's a "buyer strike on virtually everything coming out of Russia. Palladium is no exception," said Stephen Innes, managing partner at SPI Asset Management.
The resultant demand for safe havens helped gold, which is up about 3% for the week thus far, helping it mostly ignore the dollar's advance throughout the crisis, and an imminent interest rate hike by the U.S. Federal Reserve. [USD/][US/]
The confirmation of interest rate hikes is limited gold's gains, with its lack of yield making it less attractive, said Rupert Rowling, market analyst at Kinesis Money, in a note.
Spot gold rose 0.6% to $1,946.43 per ounce, and U.S. gold futures were up 0.8% to $1,950.80.
Spot silver rose 0.1% to $25.19 per ounce, and was set for a fifth consecutive weekly gain. Platinum was up 0.8% to $1,088.59.
"Given the continued sharp rise in commodities, inflation and interest rates are going to be a bigger issue than first thought as the year goes on," said David Jones, Chief Market Strategist at Capital.com.