BENGALURU - Palladium rose to a record high on Thursday on lower supply and increasing demand for the metal used in auto catalysts, while a firmer dollar offset expectations of a pause in the U.S. Federal Reserve's rate-hiking cycle, keeping gold steady.
The price of palladium, used mainly in emissions-reducing catalysts for vehicles, is up over 60 percent since marking a trough in mid-August. Prices for the metal overtook gold for the first time in 16 years early in December 2018.
Spot palladium was up 0.1 percent at $1,360, as of 0350 GMT, after earlier hitting a record high of $1,366.50.
"For now palladium is gripped by a serious supply shortage and so until that lifts, we may very well see even higher prices from here," INTL FC Stone analyst Edward Meir said.
Spot gold was steady at $1,292.76 per ounce, while U.S. gold futures dipped 0.1 percent to $1,292.30 per ounce.
Risks to the U.S. economic recovery, no end in sight to a partial government shutdown and volatile stock markets have made several Federal Reserve officials call for patience before raising interest rates again.
Echoing sentiments, Fed's latest report on the economy said businesses across the United States have become less optimistic in recent months.
"Gold has risen a lot in the recent times. But, the dollar is quite strong too and acting as a resistance for a breakout in gold," Argonaut Securities analyst Helen Lau said.
Gold has gained for five straight weeks, but prices have been hovering around the $20 range for the past two weeks and are unable to break a strong technical resistance at $1,300 level.
"Consolidation continues to be the story in gold. It's going to take a break above $1,300 or below $1,275 to get the market moving," said Amit Kumar Gupta, portfolio management services head, Adroit Financial Services in New Delhi.
Worries over a disorderly Brexit, after UK Prime Minister Theresa May's deal was defeated by British lawmakers on Tuesday, also supported gold prices, analysts said.
May on Wednesday narrowly won a confidence vote overnight and invited other party leaders for talks to try to break the impasse on a deal.
Platinum was steady at $805 an ounce, while silver dropped 0.3 percent to $15.55.