Palladium prices retreated after soaring to an all-time high on Monday to briefly pierce the $1,700 an ounce level on concerns of a shortage of the autocatalyst metal amid robust speculative and industrial demand, but gold slid 2 per cent on a stronger dollar.
Spot palladium was down 1.4 per cent to $1,657.82 an ounce by 15.34 GMT on Tuesday, having earlier touched a record $1,700.71. The metal rose by about 9 per cent last month.
"There is strong fabrication demand but a good part of this is speculative demand from investors who expect prices to rise and also people who are getting out of gold, silver and platinum because those prices are falling, some of them are shifting into palladium," said Jeffrey Christian, managing partner of CPM Group.
"There's a lot of concern that there isn't a lot of palladium around; a big part of that is people who own the metal don't want to sell at [the] current price. They want to see how high the price goes before they keep their profits."
The price of palladium, used mainly in emissions-reducing catalysts for vehicles, has risen nearly 32 per cent since the beginning of this year and over 8 per cent in the third quarter, despite a weakening market for new cars.
Meanwhile, gold fell as much as 2 per cent at $1,466.45 after the dollar hit multi-year highs. Earlier, prices fell to their lowest since August 6 at $1,465.90, with the metal also marking its first monthly decline in five.
For the quarter, however, bullion rose more than 4 per cent.
A stronger dollar makes gold costlier for holders of other currencies.
"Gold and silver ... continue to decline on a slightly firmer dollar and a relatively uneventful geopolitical landscape," INTL FCStone analyst Edward Meir said in a note.
Also weighing on gold, stock markets moved higher after Washington's dismissal of a report from Friday which had said the US administration was considering delisting Chinese companies from US stock exchanges.
Investors also kept a close eye on the US Federal Reserve's monetary policy strategy.
The central bank cut interest rates in September for the second time this year, after reducing them in July for the first time since the 2008 global financial crisis.
"The Fed said they're going to be very cautious about lowering rates since it's not clear that we really need to, which was taken as a confirmation that there's a fair bit of potential growth before getting concerned about recession. So people backed away from some of the fears that drove them into gold on a short term basis," CPM Group's Christian said.
Elsewhere, platinum dropped 5.1 per cent at $883.19, having earlier touched its lowest since August 28 at $876 and silver shed 3 per cent to $17.01 after hitting a more than one-month low of $16.96.
