Palladium surpassed the $1,400 mark for the first time on Thursday, as demand for the auto-catalyst metal overtook its availability in the market, while gold edged lower as the dollar gained on better-than-expected U.S. jobs data.

Spot palladium gained 2.28 percent to $1,390 per ounce as of 2:13 p.m. ET, having earlier hit an all-time high of $1,434.50, and rising more than 10 percent so far this month.

"The palladium market is laboring under production-consumption deficits," said James Steel, chief precious metals analyst at HSBC.

Adding to palladium's appeal were policy initiatives to help support demand that were unveiled by China, the biggest auto market, Steel said.

The price of palladium, used mainly in emissions-reducing catalysts for vehicles, has jumped more than 70 percent since hitting a trough in mid-August. The metal overtook gold in price terms for the first time in 16 years late last year.

"We are seeing steady buying in modest amounts; just no supply and no one willing to sell because you don't know where it will stop," said Tai Wong, head of base and precious metals derivatives trading at BMO.

Holdings in palladium exchange-traded funds (ETFs) tracked by Reuters have nearly halved from January last year as prices rose.

"There is not sufficient supply in the market, so people are purchasing metals from the ETFs," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS.

Meanwhile, gold fell 0.11 percent to $1,292.03 per ounce, with a psychological resistance of $1,300 holding a solid roof over its head U.S. gold futures settled $1.50 lower at $1,292.30.

"Gold dipped after the good jobless claims number from the United States, and has not recovered since. Now, the dollar is grinding higher with yields backing up, further weighing on the metal," BMO's Wong said.

The greenback ticked up on Thursday after stronger than expected economic data reports, while the pound stabilized as British policymakers sought consensus on how to exit the European Union.

The number of Americans filing applications for jobless benefits unexpectedly fell last week, pointing to sustained labor market strength that should continue to underpin the economy.

A stronger dollar makes gold more expensive for holders of other currencies.

However, the metal remains supported by a variety of factors, including a prolonged partial U.S. government shutdown, a possible pause in the U.S. Federal Reserve's rate hike cycle, and concerns surrounding Brexit, analysts said.

Spot gold is about to exit a neutral range of $1,285-$1,299, and either rise to $1,311 or drop toward $1,268, according to Reuters technical analyst Wang Tao.

In other metals, platinum held steady at $804.50 an ounce, while silver fell 0.53 percent to $15.51.