Palladium extended gains to a more than seven-month high on Thursday, spurred by concerns over supply shortages following harsh sanctions on top-producer Russia, while the Ukraine crisis and soaring inflation lifted demand for safe-haven gold.
Spot prices of palladium , used by automakers in catalytic converters to curb emissions, rose 4.1% to $2,779.09 by 01:39 p.m. ET (1839 GMT), its highest level since mid-July 2021.
"Palladium is the one commodity from Russia that accounts for a sizable amount of exposure to the country, so it is in the sweet spot in terms of its impact," ED&F Man Capital Markets analyst Edward Meir said.
Western nations have piled sanctions on Russia for its invasion of Ukraine, which accounts for 40% of global palladium production.
Spot gold was up 0.4% at $1,933.31 per ounce and U.S. gold futures settled 0.7% higher to $1,935.90.
"Gold has largely been trading at the mercy of Ukraine-Russia headlines, but has also started to rekindle its relationship with real yields ahead of the March FOMC meeting," Standard Chartered analyst Suki Cooper wrote in a note.
"Rate hike expectations have been scaled back and we continue to expect the Fed to hike by 25bps in March. Along with a flight to safety, the conflict has implications for the physical market as Russia restarts central bank gold purchases."
Investors are looking out for more clues on U.S. interest rate hikes as Fed Chair Jerome Powell's Congress testimony enters the second day.
Although gold is considered a safe investment during political and economic uncertainty, rising U.S. interest rates increase the opportunity cost of holding non-interest bearing bullion.
Meanwhile, data showed the number of Americans filing new claims for unemployment benefits fell more than expected last week.
Spot silver slipped 0.5% to $25.12 per ounce, while platinum rose 0.6% to $1,077.76.