April 23 (Reuters) – Palladium extended its blistering rally to an all-time high within striking distance of $3,000 on Friday on supply concerns and bets for improving demand, while gold pulled back on strong U.S. economic data.

Palladium jumped more than 3% to a record high of $2,925.14 per ounce, poised for a second straight weekly gain.

Many analysts expect a further run towards $3,000 as automakers ramp up purchases of the metal, worsening a supply shortage.

“We’re expected to outstrip supply for multiple years out,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

“There’s a big push for environmental reform, countries are all in, companies are pushing for more green energy and lowering emissions, and an effective way to do it is by retooling catalytic converters and relying on more electric vehicles. So that’s a lot of palladium, platinum, and copper demand right there.”

Platinum rose 1.9% to $1,226.55 per ounce by 10:23 a.m. EDT (1423 GMT).

Spot gold , meanwhile, was 0.6% lower at $1,773.45 per ounce, giving up initial gains driven by a weaker dollar and subdued U.S. yields.

U.S. gold futures dipped 0.4% to $1,774.20 per ounce. The dollar held near multi-week lows as investors waited for a U.S. Federal Reserve meeting next week, while U.S. Treasury yields slipped as traders also weighed prospects of a new tax plan from U.S. President Joe Biden.

“The focus is turning to the Fed as in recent times we have seen significant improvement in U.S. data. That’s raising speculation that the Fed might signal its intention to reduce its emergency stimulus measures in the coming months,” said Fawad Razaqzada, market analyst with ThinkMarkets.

Contributing to gold’s pullback, data showed U.S. factory activity powered ahead in early April, while a rebound in new home sales exceeded expectations in March.

Silver fell 1.1% to $25.89 per ounce.

(Reporting by Arpan Varghese and Eileen Soreng in Bengaluru; Editing by Kirsten Donovan)