* Palladium hits record high of $1,235/oz
* Gold on track for second straight day of gains
* Palladium could be bound for correction in shortterm-analysts
* GRAPHIC-2018 asset returns: (Recasts, updates prices)By Swati VermaBENGALURU, Dec 4 (Reuters) - Gold rose to its highest inmore than five weeks on Tuesday as the dollar sagged after theUnited States and China agreed a 90-day pause on fresh tradetariffs, while palladium hit a record high, leaving it about $4short of parity with bullion.Palladium rose more than 2 percent to $1,231.50 perounce by 1310 GMT, after scaling an all-time high of $1,235."The market is structurally in a significant deficit, sothere are clearly concerns about that. We've got a lot momentumand positive investor sentiment flowing into the market at themoment," said Capital Economics analyst Ross Strachan.The metal, used mainly used in emissions-reducing autocatalysts for vehicles, has gained about 48 percent sincemid-August, but not all analysts think the price is justified.
"The high price premium on palladium is not justified in ouropinion because car sales have been fairly weak on all keymarkets of late," Commerzbank analysts said in a note. "What ismore, U.S. tariffs have been threatened on imports of cars andcar parts from the European Union."Palladium's 14-day relative strength index (RSI) was around77. An RSI above 70 indicates a commodity is overbought andcould lead to a price correction.Meanwhile, spot gold rose for the second straightsession, up 0.6 percent at $1,238.90. Prices touched $1,241.10earlier in the session, their highest since Oct. 26.
U.S. gold futures were up 0.4 percent at $1,244.70per ounce.The dollar weakened against its major peers, pressured by a
thaw in trade tensions between Washington and Beijing, makinggold cheaper for holders of other currencies. "Primarily it is the weaker dollar that is providingassistance 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 thecurrent rally unless there is even more dollar weakness, simplybecause the (overall) investor sentiment for riskier assets hasimproved 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 seeninvestors opt for the safety of the U.S. currency rather thanbullion, a traditional safe haven asset."After the G20 summit, safe haven buying in the dollar indexhas reduced (and) therefore gold is looking very strong," saidVandana Bharti, assistant vice-president of commodity research,SMC Comtrade Ltd, adding $1,250 is the next target for bullionAmong other precious metals, spot silver rose 1percent to $14.52 per ounce, while platinum dipped 0.4percent to $803.50.
(Reporting by Swati Verma; additional reporting by EileenSoreng in Bengaluru; Editing by Adrian Croft and KirstenDonovan)