"The palladium market is laboring under production-consumption deficits," said James Steel, chief precious metals analyst at HSBC. Adding to palladium's appeal were policy initiatives to help support demand that were unveiled by China, the biggest auto market, Steel said.
The price of palladium, used mainly in emissions-reducing catalysts for vehicles, has jumped more than 70 percent since hitting a trough in mid-August. The metal overtook gold in price terms for the first time in 16 years late last year. "We are seeing steady buying in modest amounts; just no supply and no one willing to sell because you don't know where it will stop," said Tai Wong, head of base and precious metals derivatives trading at BMO.
Holdings in palladium exchange-traded funds (ETFs) tracked by Reuters have nearly halved from January last year as prices rose. "There is not sufficient supply in the market, so people are purchasing metals from the ETFs," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.
Meanwhile, gold edged down 0.1 percent to $1,292.13 per ounce, with a psychological resistance of $1,300 holding a solid roof over its head. US gold futures settled 0.1 percent lower at $1,292.30. "Gold dipped after the good jobless claims number from the United States, and has not recovered since. Now, the dollar is grinding higher with yields backing up, further weighing on the metal," BMO's Wong said.
Spot gold is about to exit a neutral range of $1,285-$1,299, and either rise to $1,311 or drop toward $1,268, according to Reuters technical analyst Wang Tao. In other metals, platinum held steady at $804.50 an ounce, while silver fell 0.6 percent to $15.50.