Gold prices rose above the key $1,900 an ounce level on Wednesday as tensions continue to mount in Ukraine following reports that several government and bank websites were hit by cyberattacks.
Spot gold rose 0.5% to $1,908.08 per ounce by 11:45 a.m. ET, its highest level since the end of May 2021. US gold futures held their ground, moving 0.1% higher to trade at $1,909.90 per ounce.
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Early in day, Ukraine moved toward declaring a nationwide state of emergency following Moscow’s recognition of two breakaway regions, as Russia President Vladimir Putin said he remains open to “diplomatic solutions” so long as his nation’s interests and security are guaranteed.
Bullion is trading near the highest in over eight months after rallying on the simmering geopolitical tensions. It has attracted renewed interest from investors in exchange-traded funds and hedge funds trading the Comex, which both spent much of 2021 on the sidelines.
Meanwhile, palladium gained 3.6% amid fears of supply concerns from Russia, the top producer. Last year, Russia produced 2.6 million ounces of palladium, representing 40% of global mine production.
The metal used in catalytic converters has seen its price soar since January, coinciding with the geopolitical tensions in the region. At $2,441.22 an ounce, palladium is trading near its highest in six months.
While it was “still too early” to tell if supply issues would materialize, “if we see a set of sanctions that reduce financing and free flow of the material to the rest of the world, we could see a significant tightening of conditions for palladium probably in the not too distant future,” Bart Melek, head of commodity strategies at TD Securities, told Reuters.
Platinum group metals could see a “pretty significant rally” with palladium likely to reach record highs seen last year over $3,000 an ounce, Melek added.
(With files from Bloomberg and Reuters)
