Palladium soared on Monday to hit $1,800 an ounce for the first time ever, extending a record run triggered by a stark supply shortfall, while gold fell nearly 1% on optimism surrounding a U.S.-China deal that pushed stocks to a fresh peak.
Palladium rose 2.1% to $1,799.59 per ounce as of 11:18 a.m. EDT, having hit a record high of $1,804.08.
The metal has climbed about 43% so far this year.
"There's just a persistent, continuing shortage of the metal," said Tai Wong, head of base and precious metals derivatives trading at BMO.
"The sharp rally does suggest a correction at some stage but the outlook is robust. Palladium could even hit $2,000 next year; perhaps even higher, but the path is unlikely to be smooth."
Gaping supply shortages will see palladium cement its price premium over platinum next year, a Reuters survey showed.
Chiefly used in vehicle exhausts to reduce harmful emissions, platinum is favoured for diesel engines and palladium is preferred for gasoline engines.
Platinum fell 0.6% to $920.73 per ounce.
Spot gold, meanwhile, was down 0.8% to $1,492.43 per ounce, while U.S. gold futures fell 0.7% to $1,494.90.
"It's a risk-on sentiment - people are getting out of the safe-haven trade, out of gold and going into equities," said Phillip Streible, senior commodities strategist at RJO Futures.
U.S. stock markets, especially the S&P 500 that touched a peak, were riding high on the advancing trade talks and stronger earnings.
U.S. President Donald Trump said he expected to sign a significant part of the trade deal with China ahead of schedule after officials from both nations confirmed they were "close to finalising" parts of the agreement on Friday.
However, "both gold and silver are in near-term price uptrends now. So the technical posture remains overall bullish. That's going to limit selling pressure," RJO Futures' Streible added.
Fragile global growth and the prospect of interest rates staying lower for longer, boosting gold's appeal for nervous investors, are behind upward revisions to price forecasts for the bullion, a Reuters survey showed.
Traders also awaited the Federal Reserve's Oct. 29-30 meeting, at which the U.S. central bank is widely expected to cut interest rates for the third time this year.
"If the Fed leans easy on monetary policy and surprises the market a little, that's going to boost gold," said Jim Wyckoff, senior analyst with Kitco Metals.
"If the Fed leans hawkish and maybe suggests that there may not be anymore or few interest rate hikes in the coming months or longer, that's going to be bearish for gold."
Silver dipped 0.9% to $17.87 per ounce.