LONDON: Palladium slumped more than 10% on Monday, erasing the bulk of a rally that had taken it to record highs during the Ukraine crisis as supply worries eased. Amid cautious hopes for progress in peace talks, gold also fell more than 1%.

Autocatalyst metal palladium , of which Russia is the biggest producer, was down 9.3% at $2,555.46 per ounce by 1102 GMT, facing its biggest daily percentage drop in at least nine months. It fell as much as 11.1% earlier in the session. Tentative hopes of progress in peace talks between Ukraine and Russia lifted equity markets on Monday. Ukraine said it had begun “hard” talks on a ceasefire, immediate withdrawal of troops and security guarantees with Russia after both sides reported rare progress at the weekend.

“Palladium over-reacted in the first place.” StoneX analyst Rhona O’Connell said. “The rally we’ve seen has been built on straw, rather than on concrete.” There was no clear supply disruption and very little industrial demand, she added. Russian mining giant Nornickel’s biggest shareholder told Russian RBC TV on Saturday the group has managed to secure alternative routes for its palladium deliveries even as it faced significant logistics constraints.

A market authority said last week that Russian refiners can continue to sell platinum and palladium in top hub London.

Platinum dropped 3.7% to $1,039.85. Spot gold was down 1.2% at $1,962.01 per ounce, while US gold futures shed 1% to $1,964.00.

While there is a risk-on mood across major markets, “I wouldn’t call this (the recent rally) the peak in gold just yet, because this (Ukraine) situation is still uncertain. It’s so fluid,” Julius Baer analyst Carsten Menke said.

Menke also said short-term speculative traders who bought gold due to the war were now possibly booking profits.

Also pressuring non-yielding bullion, benchmark US 10-year Treasury yields surged as the US Federal Reserve is expected to raise interest rates at a two-day event later this week.