Palladium prices fell on Wednesday as the dollar rose against most major rivals with markets gauging the likelihood path ahead for industrial metals prices and demand.

A recent private sector survey showed China's factory activity expanded in December, however a separate study showed persistent weakness, which sheds light on the need for further stimulus measures.

Markets continue to follow the Federal Reserve's likely trajectory forward, awaiting the Fed's last meeting minutes to gauge future monetary policies.

The FedWatch tool showed a 89.1% likelihood that the Fed will maintain interest rates flat in January, with a 70.4% chance for an interest rate cut in May.

Otherwise, the dollar index rose 0.4% as of 16:42 GMT to 102.6, with a session-high at 102.6, and a low at 102.08.

On trading, palladium futures due in March fell 1.4% to $1,068.5 an ounce as of 16:43 GMT.