Palladium prices extended a two-month rally Wednesday as rising U.S. car and truck sales signaled increased demand for the white metal.

November car sales in the U.S. beat expectations, lifting palladium to more than 17 percent above its Nov. 28 price of $574 per troy ounce. In early morning trading, palladium climbed to $676.90, which is 21.3 percent above its price in early October.

Analysts expect the rally to continue.

Having cleared technical resistance around $672, the metal could hit $740, James Moore, research analyst with Fast Markets Ltd., wrote in a note.

UBS analyst Edel Tully characterized palladium's climb past the $678.25 level as a key bullish event, and said in a note that the next resistance level is at $722.25.

If palladium climbs to that level is may be on support from emerging market demand for cars, especially if newly wealthy Asian buyers turn increasingly towards luxury vehicles whose anti-pollution equipment requires more palladium than more economical models.

HSBC analyst James Steel said Tuesday that palladium is supported by concerns that Russian stockpiles are running low.