Palladium falls 11% on lower fears of shortages, while gold falls 1%

Palladium tumbled more than 10% on Monday, erasing most of the rally that took it to record highs during the Ukraine crisis as supply concerns eased.

Also, amid cautious hopes for progress in peace talks, gold was down more than 1%.

Palladium, a metal used to make catalysts and from which Russia It is the largest producer, down 9.3% to $2,555.46 per ounce by 1102 GMT, facing its biggest daily percentage drop in at least nine months. Earlier in the day it fell 11.1%.

The timid hopes that there will be progress in the peace talks between Ukraine and Russia buoyed the stock markets on Monday.

“Palladium overreacted in the first place,” said Rhona O’Connell, an analyst at StoneX. “The climb we saw was built on straw, rather than concrete.” There was no clear supply disruption and very little industrial demand, she added.

Platinum was down 3.7% at $1,039.85 an ounce, and spot gold was down 1.2% at $1,962.01, while US gold futures were down 1% at $1,964.

Although there is a risk environment in the main markets, “I would not say that this (the recent rally) is the peak of gold yet, because the situation (in Ukraine) remains uncertain. It’s very fluid,” said Julius Baer analyst Carsten Menke.

Spot silver fell 2.3% to $25.20 an ounce.