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Palladium prices fell nearly 13% on Monday as China’s COVID-led lockdowns soured the demand outlook for the autocatalyst, while looming U.S. interest rate hikes took the shine off gold.

Spot palladium fell 10.6% to $2,122.21 per ounce by 10:19 a.m. ET (1419 GMT), after hitting its lowest since March 29 at 2,068.82.

Commodities across the board dipped as concerns grew over prolonged lockdowns in Shanghai and potential increases to U.S. interest rates hurting global growth and demand.

The metal, used in vehicle exhausts to curb emissions, has retreated nearly 40% since hitting an all-time high in early March on concerns that the war in Ukraine could cut supply from key producer Russia.

“Much of the angst in palladium is surrounding the potential problems with the Chinese economy,” said head of commodity strategies at TD Securities, Bart Melek.

“(With) an increasing amount of that country being shut, chances are auto demand and economic activity broadly aren’t going to be as strong as we thought, and this is offsetting a lot of the potential shortage concerns associated with the Russian sanctions,” Melek added.

Gold was also down 1.8% to $1,895.36 per ounce, while U.S. gold futures fell 1.9% to $1,896.90.

“It seems that fears about rate hikes have gotten the upper hand as of late,” said Julius Baer analyst Carsten Menke.

“We would think that the inflationary pressures are about to ease and that should take away some of the safe haven demand seen for gold,” Menke added.

Although bullion is considered a hedge against soaring inflation and uncertainties such as the Ukraine conflict, rising interest rates dampen its appeal by increasing the opportunity cost of holding the non-interest bearing asset.

The dollar index hit a two-year high, making gold costlier for overseas buyers.

Platinum fell 1.9% to $913.17 after touching a trough since December 2021, while silver fell 2.7% to $23.49 per ounce, after hitting an over two-month low.

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