SINGAPORE – Palladium is heading for the biggest weekly decline in more than three years as investors’ focus turned to demand amid concerns over slowing global growth, with the slump following repeated warnings that the metal’s recent surge to record highs had propelled it into bubble territory.

The metal used in auto catalysts to curb emissions sank 12% this week after hitting an all-time high on supply woes on March 21. The massive rally, which saw prices almost double since August, spurred predictions a reversal was inevitable, and hedge funds had cut bullish bets for a fourth week.

With the palladium market expected to be in deficit for an eighth year, manufacturers of gasoline vehicles have scrambled to get hold of supplies to meet stricter standards for pollution control. Still, analysts surveyed by Bloomberg last week saw the metal ending the year in the $1 300s an ounce, partly as shortages are priced in and as car sales in key markets slow. As prices scaled new highs in the first quarter, Saxo Bank, Commerzbank and UBS Group were among banks warning of the potential for substantial pullbacks.

“Much of palladium’s doubling in price over the last eight months was driven by supply concerns, and these are well-explored,” Michael McCarthy, chief market strategist at CMC Markets Asia Pacific, said in an email. “Naturally the momentum attracted speculative as well as trade support. The ongoing contraction in China car manufacturing and a recent string of weaker macro data has shifted focus to the demand side of palladium markets, and at the moment selling is begetting selling.”

Spot palladium traded at $1 360.95 an ounce at 6:22 a.m. in London, after dropping 7.3% Thursday and more than 5% the day before. It’s down 12% in March, but still heading for a fourth quarterly gain after prices hit an all-time high of $1 614.88 last week.

Even after the slump, some banks were looking for a rebound. “Our base case is that the market is likely to find its feet soon, bouncing back in the near term,” Citigroup Inc. analysts including Max Layton said in a March 29 report. As physical indicators still reasonably tight, the market should rebound as it “still needs to incentivize substitution.”

More than 80% of palladium comes as a byproduct from nickel mining in Russia and platinum mining in South Africa from producers including MMC Norilsk Nickel PJSC and Impala Platinum Holdings. Even after palladium’s premium over platinum widened, some auto and mining executives are downplaying the viability of the latter as a replacement.