* Gold steadies on hopes Fed will maintain accommodative stance
* U.S. Fed starts two-day policy meeting on Tuesday
* Thin volumes driving volatility in palladium - analyst
* GRAPHIC-2019 commodities returns: tmsnrt.rs/2jvdmXl (Adds comments, updates prices)
By Sethuraman N R
March 18 (Reuters) - Palladium touched an all-time high on Monday, continuing a strong run this year on a supply shortfall of the autocatalyst material, while gold held above the key $1,300-per-ounce level on expectations the U.S. Federal Reserve will hold rates steady this week.
Spot palladium was up 1.4 percent an $1,581.01 an ounce at 1:33 p.m. EDT (1733 GMT), after touching its highest ever at $1,584 earlier in the session.
The metal has already gained 26 percent for the year, having climbed more than 90 percent from its trough in mid-August last year.
“There is big demand and the exchanges have no material,” said George Gero, managing director at RBC Wealth Management.
“The industry does not use bars, so the mines make grains, which are not deliverable,” Gero said, limiting the amount of trading of futures of the metal. He also said thin trading was perking up volatility of the metal.
The palladium market remains in a supply deficit and specialist materials company Johnson Matthey projected in a report last month that deficits will widen dramatically this year.
A potential stimulus from China should be boosting momentum for the metal as well, analysts said. China, the largest automobile market, has pledged policy measures to prop up its economy.
Spot gold was steady at $1,301.84 per ounce while U.S. gold futures settled down 0.1 percent at $1,301.50.
Investors have now shifted focus to the Fed’s decision on interest rates. Markets expect no rate hikes this year, and are even building in bets for a rate cut in 2020.
Lower interest rates tend to pressure the dollar and increase investor interest in non-yielding bullion.
“Gold price is dancing just above the $1,300 threshold, without a clear direction ... bullion has been so far unable to surpass $1,310 and remains deadlocked close to $1,300 in this ‘wait-and-see’ scenario,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Meanwhile “a potential China-U.S. trade deal should impact the Chinese Renminbi positively and that would be a catalyst for firmer gold,” said Bart Melek, head of commodity strategies at TD Securities in Toronto. Silver gained 0.2 percent to $15.31 an ounce and platinum rose 0.7 percent to $833.55. (Reporting by Arijit Bose and Nallur Sethuraman in Bengaluru)