PRECIOUS-Palladium tops $3,000 for first time amid undersupply

    * Graphic: 2021 asset performance
    * Gold, silver on course for best month since December 2020

 (Updates prices, adds details)
    By Sethuraman N R and Peter Hobson
    April 30 (Reuters) - Palladium rose above $3,000 an ounce
for the first time on Friday as the market worried about a
shortage of the metal embedded by automakers in exhaust pipes to
neutralise emissions.
    Palladium        was up 0.8% at $2,976.49 an ounce at 1010
GMT after reaching $3,007.73.
    Prices have shot up over 20% since March 16 when top
producer, Russia's Nornickel           announced that flooding
at two of its mines would reduce output.             
    "Palladium has been in a structural deficit for 10 years. We
have seen above ground inventories falling to very low levels,"
said UBS analyst Giovanni Staunovo.
    "(Palladium) can be very illiquid and this is making the
moves even more crazy. This rally can continue, particularly if
car sales start to improve," he said.
    Demand from the auto industry is rising and expected to
climb further as a semiconductor chip shortage that has
curtailed production eases later this year.             
    But Commerzbank analyst Carsten Fritsch said prices were
unlikely to remain above $3,000 and would begin to fall as
automakers switch from palladium to cheaper platinum.
    "At this (price) level more and more car manufacturers will
think about substitution," he said.
    Tightening environmental rules have forced automakers to use
more and more palladium in their gasoline engines in recent
years but substitution and a shift to electric vehicles may
eventually erode demand.             
    Meanwhile, spot gold        eased 0.2% to $1,767.40 an
ounce. U.S. gold futures        were steady at $1,767.60. 
    Gold was nevertheless up 3.5% this month, its best since
December, helped by falling returns on U.S. bonds, a competing
asset class, and a weaker dollar, which makes bullion cheaper
for buyers with other currencies.            
    The dollar weakened after the Federal Reserve promised to
keep interest rates low, but bond yields were higher after
President Joe Biden proposed massive state spending and data
showed U.S. economic growth accelerated in the first quarter.
    Silver        fell 0.7% to $25.90 an ounce and up more than
6% in April - its biggest monthly gain since December.
    Platinum        gained 0.7% at $1,205.83. 

 (Reporting by Nallur Sethuraman in Bengaluru, Peter Hobson in
London, additional reporting by Arpan Varghese; Editing by
Emelia Sithole-Matarise and Elaine Hardcastle)