Palladium prices fell to a more than 5-week low on Thursday, a day after posting its steepest decline in over two years, as concerns about the global economy and a buoyant dollar prompted investors to take profits.
Spot palladium fell 0.7 percent to $1,433.88 per ounce at 0356 GMT. Prices tumbled 6.3 percent on Wednesday, marking the biggest one-day percentage fall since January 2017.
The metal, used extensively in the making of catalytic converters in vehicles, has already shed about $187 from a record peak of $1,620.52 hit last week.
"With the concerns around economic growth and a stronger dollar, investors took profits after the strong rally we've had in the past few weeks," ANZ analyst Daniel Hynes said, adding that worries about demand have emerged amid tight supplies.
"The tightness in the market and concerns about supply side issues will keep prices elevated. But if we do see continued strength in U.S. dollar, this sell-off might extend a little bit longer."
The dollar index was trading near a two-week peak and extended gains for a third straight session against its peers, making dollar-denominated metals more expensive for holders of other currencies.
The auto-catalyst metal was trading below the 55-day moving average of around $1,453 an ounce, which it breached for the first time since August on Wednesday.
"Given the extent of the technical damage, we suspect that palladium prices will likely push somewhat lower over the days ahead as a consolidation range starts to get carved out," INTL FCStone analyst Edward Meir wrote in a note.
Some analysts also attributed Wednesday's sharp sell-off to comments by Anglo American Chief Executive Mark Cutifani, who said palladium was a "bubble".
Spot gold prices on the other hand were steady at $1,309.71 per ounce. Bullion touched a one-week low earlier in the session, mainly pressured by a strong dollar.
U.S. gold futures were down 0.1 percent to $1,308.70 an ounce.
"The uncertainties around the macro backdrop have elicited some strength to the U.S. dollar," ANZ's Hynes said. "The gold market is closely following data in the short term and how that affects the U.S. Federal Reserve."
The U.S. economy faces "notable" risks and the Fed can take a wait-and-see approach to monetary policy, Kansas City Federal Reserve Bank President Esther George said on Wednesday.
Silver edged 0.1 percent higher at $15.29 per ounce, while platinum rose 0.7 percent to $853.80.