PRECIOUS-Under-supplied palladium races to record, gold awaits Fed
* Palladium hits record of $2,962.50/oz
* Palladium could break above $3,000 by next month -analyst (Updates prices)
By Eileen Soreng
April 27 (Reuters) - Palladium prices hit a record on Tuesday, spurred by persistent supply worries, while gold held a narrow range as investors awaited policy signals from the U.S. Federal Reserve's meeting this week.
Palladium XPD= hit a record of $2,962.50 per ounce earlier and was up 0.9% at $2,952.01 per ounce by 1:43 p.m. EDT (1743 GMT)
"What we're seeing here in palladium is a market that's in a deeper deficit than many had expected earlier in the year... That's going to continue to fuel higher prices in the near term," said TD Securities commodity strategist Daniel Ghali.
At this rate, palladium can trade north of $3,000 by next month, he added.
Prices of palladium, used in catalytic converters to clean car exhaust fumes, have risen 20% so far this year.
A Reuters poll returned a higher forecast for palladium after flooding at the biggest supplier, Russia's Nornickel GMKN.MM , worsened a shortage. gold XAU= inched 0.1% lower to $1,778.01 per ounce with investors focused on the Fed's meeting.
U.S. gold futures GCv1 settled down 0.1% at $1,778.8.
"Gold investors will be watching for any indications from the Fed as to whether they're seeing any longer-term sustainable inflation," said Jeffrey Sica, founder of Circle Squared Alternative Investments.
An acknowledgement of inflation and the anticipation that there will be more could help gold break above $1,800, Sica added.
While gold is considered a hedge against inflation that could follow widespread stimulus, elevated Treasury yields have dulled the non-yielding bullion's appeal this year.
No major policy changes are expected from the Fed meeting ending on Wednesday, but investors will pay close attention to Chairman Jerome Powell's economic outlook. have slashed their gold price forecasts, with many believing a return to last year's record highs is unlikely as the economy recovers. XAG= rose 0.4% to $26.32 per ounce. Platinum XPT= edged 0.2% lower to $1,240.84.
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