Palladium broke past $1,550 for the first time on Tuesday on the back of intensifying supply deficit, while gold dipped slightly after U.S. Federal Reserve Chairman Jerome Powell reiterated patience in further rate hikes.
Spot palladium soared to $1,565.09 per ounce earlier in the day, and was up 1.2 percent at $1,559.50 as of 1:10 p.m. ET.
"Palladium is up based on the fact that there are 15 mining firms in South Africa, that could go on strike this week," Bob Haberkorn, senior market strategist at RJO Futures.
The news of South African mining firms receiving notices of strikes to be held next week aggravated supply concerns in an already tight market, with prices soaring about 24 percent so far this year.
The world's largest palladium producer, Norilsk Nickel , on Tuesday said tighter emissions regulations in all major markets and flattish primary supply would widen a the autocatalyst metal's deficit in 2019.
"There are increased talks that palladium is entering into the bubble territory because of the relentless rally that we have seen," Saxo Bank analyst Ole Hansen said. "Those who are long are tempted to take profits while we potentially may see a few attempts to sell some shorts in the market."
Elsewhere, spot gold was steady at $1,326.75. U.S. gold futures settled $1 lower at $1,328.50 per ounce.
While Powell reiterated the rhetoric of "patience" about the future of interest rate hikes in a prepared testimony released in advance of a hearing before the U.S. Senate Banking Committee, stronger than expected consumer confidence data has kept gold pressured, analysts said.
On the other hand "the U.S. housing data is a bit of a concern, it proves that the Fed may have overtightened," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
U.S. homebuilding tumbled to a more than two-year low in December as construction of both single and multi-family housing declined, the latest indication that the economy lost momentum in the fourth quarter.
"However, there is not going to be any other occasion that the Fed is going to be more dovish than it already is, so gold futures have not reacted to Powell's speech at all," Streible added.