Appetite for gold, already sidetracked by a rising and improving dollar, will all the more get relegated to the background as investors turn to palladium and other industrial metals in a bid to diversify portfolio holdings.

Data culled by Bloomberg showed palladium-backed exchange-traded product holdings had already risen by as much as 13 per cent this year, and could average by as much as $850 an ounce in the last quarter of 2012, translating to a hike of 39 per cent more than the current prices, analysts surveyed by Bloomberg further said.

Known as element 46 in the Chemical Table of Element, palladium is under the platinum group of metals as they all have qualities of chemical inertness and physical weight. Palladium has the ability to absorb up to 900 times its own weight of hydrogen gas, making it ideal for use in automobile catalytic converters, the www.nuwireinvestor.com said.

"Palladium is in particularly good shape thanks to its versatility in the automotive, jewelry and electronics industries," www.nuwireinvestor.com further said, noting the industrial metal's importance is positioned to increase in value purely due to consumption.

"I like palladium the best among precious metals, it's relatively cheap compared to the others," Bart Melek, a commodity strategist, said in Bloomberg News. "Autocatalyst demand for palladium should grow. Russian government stocks will limit supply growth."

Palladium, twice as common as gold, however is produced only minimally, about 200 metric tons of palladium annually, less than a tenth of annual gold production.

Both Russia and South Africa are palladium's principal producers, cornering about 40 per cent of the market.