Palladium and platinum prices are falling sharply as traders pull out of the highly volatile contracts to raise cash as new trading curbs went into effect in Europe.

Palladium is down 9 percent and platinum 5 percent after Germany introduced strict restrictions on certain kinds of bearish bets on European debt and stocks.

Investors who have to exit those positions felt they could raise the money to cover those positions by selling palladium and platinum contracts.

Analysts say the sell-off is likely to be short-lived because the fundamentals behind the precious metals haven't changed meaningfully.