* Palladium hits record high of $1,235/oz
* Gold on track for second straight day of gains
* Palladium could be bound for correction in short term-analysts
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl (Recasts, updates prices)
BENGALURU, Dec 4 (Reuters) - Gold rose to its highest in more than five weeks on Tuesday as the dollar sagged after the United States and China agreed a 90-day pause on fresh trade tariffs, while palladium hit a record high, leaving it about $4 short of parity with bullion.
Palladium rose more than 2 percent to $1,231.50 per ounce by 1310 GMT, after scaling an all-time high of $1,235.
"The market is structurally in a significant deficit, so there are clearly concerns about that. We've got a lot momentum and positive investor sentiment flowing into the market at the moment," said Capital Economics analyst Ross Strachan.
The metal, used mainly used in emissions-reducing auto catalysts for vehicles, has gained about 48 percent since mid-August, but not all analysts think the price is justified.
"The high price premium on palladium is not justified in our opinion because car sales have been fairly weak on all key markets of late," Commerzbank analysts said in a note. "What is more, U.S. tariffs have been threatened on imports of cars and car parts from the European Union."
Palladium's 14-day relative strength index (RSI) was around 77. An RSI above 70 indicates a commodity is overbought and could lead to a price correction.
Meanwhile, spot gold rose for the second straight session, up 0.6 percent at $1,238.90. Prices touched $1,241.10 earlier in the session, their highest since Oct. 26.
U.S. gold futures were up 0.4 percent at $1,244.70 per ounce.
The dollar weakened against its major peers, pressured by a thaw in trade tensions between Washington and Beijing, making gold cheaper for holders of other currencies.
"Primarily it is the weaker dollar that is providing assistance and that will be the key driver in the short term," Capital Economics' Strachan said.
"However, it is going to find it difficult to sustain the current rally unless there is even more dollar weakness, simply because the (overall) investor sentiment for riskier assets has improved and that would prove to be a drag in the short term."
The temporary freeze on further hostilities in the trade war sparked a global rally in equity markets on Monday.
Global trade tensions over the past few months have seen investors opt for the safety of the U.S. currency rather than bullion, a traditional safe haven asset.
"After the G20 summit, safe haven buying in the dollar index has reduced (and) therefore gold is looking very strong," said Vandana Bharti, assistant vice-president of commodity research, SMC Comtrade Ltd, adding $1,250 is the next target for bullion
Among other precious metals, spot silver rose 1 percent to $14.52 per ounce, while platinum dipped 0.4 percent to $803.50. (Reporting by Swati Verma; additional reporting by Eileen Soreng in Bengaluru; Editing by Adrian Croft and Kirsten Donovan)