* Palladium peaks at $1,458/oz, strongest on record
* Investors await Fed minutes on Wednesday
* Dollar off two-month high
* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl
By K. Sathya Narayanan
Feb 18 (Reuters) - Palladium surged to a record high on Monday as a sustained supply deficit boosted the autocatalyst metal, while gold rose to its strongest since April on a lower dollar.
Spot palladium, which traded as high as $1,458 per ounce, was up 1.8 percent at $1,457 at 2:00 p.m. EST (1900 GMT).
The deficit in the palladium market will widen dramatically this year as stricter emissions standards increase demand, autocatalyst manufacturer Johnson Matthey said in a report last week.
"The market is fundamentally strong," Julius Baer analyst Carsten Menke said. "(The) ongoing deficit and autocatalyst producers saying they are not seeing broad-based substitution from palladium to platinum really reinforce the prevailing positive sentiment."
Both metals are primarily used by automakers in catalytic converters, but platinum is more heavily used in the diesel vehicles, which have fallen out of favor since the Volkswagen emissions-rigging scandal broke in 2015.
Unlike platinum, palladium has benefited from the switch away from diesel engines and expectations for growth in hybrid electric vehicles, which tend to be partly gasoline-powered.
This has helped cushion the metal from the impact of falling car sales across the globe.
"Industrial demand is good, but not booming considering how weak the car markets are. (However) the case for a multi-year deficit is much more compelling, and there is a very good price trend, attracting a lot of investment demand," Menke said.
While prices are likely to climb in the short term, "in the longer term, say the next 12 months, assuming global car sales fail to rebound as the global economy slows, prices will be pushed back," he said.
Meanwhile, spot gold rose 0.4 percent to $1,326.15 per ounce, having earlier hit $1,327.64, its highest since April 25.
U.S. gold futures rose 0.6 percent to $1,329.70.
Helping bullion's advance, the dollar backed away from a two-month high hit last week on rising optimism for a U.S.-China trade deal.
A trade resolution will likely increase the yuan's value and in turn, demand from China, Forex.com analyst Fawad Razaqzada said.
"Also, a resolution is dollar negative as the U.S. government will decide to lower import tariffs, which will pull import prices down, causing inflation to fall and reduce the need for the U.S. Federal Reserve to increase interest rates."
Investors will be looking ahead to minutes of the Fed's January policy meeting on Wednesday for further clarity on interest rate hikes this year. Higher rates tend to weigh on non-yielding gold.
Among other precious metals, platinum was unchanged at $802 per ounce, while silver gained 0.2 percent to $15.80.
Reporting by K. Sathya Narayanan in Bengaluru; Editing by Tom Brown and Steve Orlofsky