Palladium scaled a record peak on Monday, continuing a strong run this year on a supply shortfall of the autocatalyst material, as a softer dollar drove gains across precious metals.
Gold also gained on expectations the U.S. Federal Reserve will keep interest rates unchanged this week. Lower interest rates tend to pressure the dollar and increase investor interest in non-yielding bullion.
Spot palladium rose 1 percent to $1575.28 at 11:00 a.m. EDT (1500 GMT), after touching its highest ever at $1,583.51 earlier in the session.
The metal has already gained about 26 percent for the year, having climbed nearly 90 percent from its trough in mid-August last year.
"We've seen a slide in the U.S. dollar index for the past couple of days. Secondly, gold performed a little better and typically, the precious metals travel in a pack," said Bart Melek, head of commodity strategies at TD Securities in Toronto.
The dollar weakened against a basket of six major peers, hovering just above a two-week low, ahead of the Fed's meeting this week.
"We are also looking at potential stimulus from China, which should be helping (palladium) as well," Melek added.
China, the largest automobile market, has pledged policy measures to prop up its economy.
The palladium market remains in a supply deficit and specialist materials company Johnson Matthey projected in a report last month that deficits will widen dramatically this year.
"There is big demand and the exchanges have no material," said George Gero, managing director at RBC Wealth Management.
"The industry does not use bars, so the mines make grains, which are not deliverable," Gero said, adding thin trading was perking up volatility of the metal.
Spot gold rose 0.4 percent to $1,305.66 per ounce while U.S. gold futures gained 0.2 percent to $1,305.40.
Investors have now shifted focus to the Fed's decision on the trajectory of interest rates. Markets expect there will be no rate hikes this year, and are even building in bets for a rate cut in 2020.
"Gold price is dancing just above the $1,300 threshold, without a clear direction... bullion has been so far unable to surpass $1,310 and remains deadlocked close to $1,300 in this 'wait and see' scenario," ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Meanwhile "a potential China-U.S. trade deal should impact the Chinese Renminbi positively and that would be a catalyst for firmer gold," TD Securities' Melek said.
Silver gained 0.8 percent to $15.40 an ounce and platinum rose 0.8 percent to $834.24.