Platinum Falls in London on Concern About Flu’s Effect on Trade
By Anna Stablum
April 28 (Bloomberg) -- Platinum fell for a third day in London, the metal’s worst losing streak since January, as commodities slid on concern that the swine-flu outbreak will hamper efforts to revive trade and economies, curbing demand.
Crude oil, industrial metals and grains retreated for a second day. Gold fell below $900 an ounce. The auto industry accounts for about half of platinum use, according to metals researcher and refiner Johnson Matthey Plc.
“Obviously there is potential for a significant impact on global trade and the world economy,” said Dan Smith, an analyst at Standard Chartered Plc in London. “It is seen as another potential setback,” he said of the virus.
Platinum for immediate delivery lost $44.50, or 3.9 percent, to $1,099.50 an ounce at 12:15 p.m. local time. The metal slid for four days through Jan. 15. Palladium, also used by carmakers, fell $7.25, or 3.2 percent, to $218.50 an ounce.
The flu is no longer containable, the World Health Organization said, raising its global pandemic alert to the highest level since the warning system was adopted in 2005. The virus has been confirmed in Mexico, the U.K., the U.S., Canada, Spain, Israel and New Zealand.
Helping the Dollar?
“With investors fearful of the spreading swine-flu virus, risk appetite could remain under pressure today, which could further benefit the greenback,” Manqoba Madinane, an analyst at Standard Bank Group Ltd. in Johannesburg, said in a report.
The dollar climbed for a second day against the euro, which fell as much as 0.4 percent. Precious metals and the dollar tend to move in opposite directions.
Crude retreated, reducing metals’ appeal as a hedge against accelerating consumer prices, on concern that the flu outbreak will hurt travel demand. The virus is having the heaviest effect on energy, Morgan Stanley said yesterday in a report. Copper for three-month delivery declined as much as 4.2 percent on the London Metal Exchange today.
“There is a sell-off in commodities as a whole, and that is having a negative impact on gold,” said Daniel Major, an analyst at RBS Global Banking and Markets in London.
Gold for immediate delivery fell $8.15, or 0.9 percent, to $898.35 an ounce, rebounding from a slide of as much as 1.6 percent. The metal slipped 0.7 percent yesterday after posting its first weekly climb in five weeks. June futures dropped 1 percent to $898.90 in electronic trading on the New York Mercantile Exchange’s Comex division.
Gold Scrapping
“The last time we saw bird flu, demand for gold out of Asia vanished,” Michael Blumenroth, a trader at Deutsche Bank AG in Frankfurt, said by telephone. “It is the same problem at the moment. If it spreads further, it will be bad for every market.”
Bullion fell $14.75 to $897 an ounce in the morning “fixing,” used by some mining companies to sell production, from yesterday’s afternoon fixing.
Gold scrap supplies likely exceeded 500 metric tons in the first quarter, on par with global mine production, according to researcher GFMS Ltd. Scrapping will be “much lower” in the second quarter unless gold prices rise “aggressively,” GFMS Chairman Philip Klapwijk said today in an interview in Zurich.
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, remained at 1,104.45 tons for a third day yesterday. ETF activity seemingly has “tailed off” in recent weeks, with investors “pausing to take a breath at the moment,” said RBS’s Major.
The metal will benefit from inflation later in the year, according to RBS. Bullion will average $915 an ounce in the current quarter, rising to $975 in the coming three months and $1,000 in the fourth quarter, Major said.
Silver dropped 2.5 percent to $12.59 an ounce.
To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net.
Last Updated: April 28, 2009 07:18 EDT
