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Palladium rallied for a third straight session on Wednesday as sanctions slapped on Russia over Ukraine aggravated supply concerns, while gold eased as U.S. yields ticked up and the dollar charged higher.

Palladium XPD=, used by automakers in catalytic converters to curb emissions, was up 1% at $2,604.61 by 1028 GMT, having hit its highest since July at $2,722.79 on Tuesday.

Western nations have ratcheted up sanctions on Russia, which accounts for 40% of global palladium production, including shutting out some Russian banks from the SWIFT global financial network.

The sanctions will affect palladium supplies to the international market, Quantitative Commodity Research analyst Peter Fertig said, adding prices are yet to peak.

Given wider market forces, Ilya Spivak, a currency strategist at DailyFX, said it was "not surprising" that palladium was supported. (Full Story)

Driving a slight retreat in gold, the U.S. dollar index hit its highest since May 2020, making the metal more expensive for overseas buyers.

Benchmark 10-year U.S. Treasury yields also firmed, drawing some investors away from non-interest bearing bullion. USD/ US/

Spot gold XAU= fell 1% to $1,924.00 per ounce. U.S. gold futures GCv1 dipped 0.4% to $1,935.60.

While gold was being pressured by the dollar and yields, this was only a small correction and with the possibility of more Western involvement in the Ukraine crisis, there's "a lot of political dynamite which could be supportive for gold", QCR's Fertig said.

On Monday, safe-haven gold rose as much as 2.2% to near the 17-month peak set last week.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 1,042.38 tonnes on Tuesday — the highest since July 2021. GOL/ETF

Spot silver XAG= fell 1.6% to $24.97 per ounce, while platinum XPT= rose 0.9% to $1,062.74.