Platinum Falls to 7-Week Low as Slower Recovery May Curb Demand
By Nicholas Larkin
July 8 (Bloomberg) -- Platinum fell to a seven-week low in London, heading for the longest losing streak since October, on concern a slower economic recovery will hurt demand. Gold was little changed after dropping to a two-week low.
The MSCI World Index of shares retreated for a fifth day on speculation that second-quarter earnings reports will show the first global recession since World War II is far from over. Crude oil slid for a sixth day, while the dollar traded near a two-week high against a basket of major currencies.
A slower economic recovery is “bad for the car industry, because there’s less demand for platinum-group metals,” Bernard Sin, head of currency and metals trading at Swiss refiner MKS Finance SA, said by phone from Geneva. “There was also some stop-loss selling” from Asia today, he said. Some investors sell commodities when prices fall below certain thresholds.
Platinum for immediate delivery dropped as much as 2.5 percent to $1,106 an ounce, the lowest since May 18. The metal traded at $1,114.50 at 11:55 a.m. in London. Platinum futures for October fell 1.4 percent to $1,120.50 on the New York Mercantile Exchange.
A weaker economy may cut demand for precious metals used more in industry. Automakers account for about 60 percent of platinum and palladium use, according to London-based metals researcher, refiner and trader Johnson Matthey Plc.
Stronger Dollar
Gold for immediate delivery in London fell as much as $5.68, or 0.6 percent, to $919 an ounce, the lowest since June 23. It last traded at $920.87. August gold futures lost 0.9 percent to $920.70 an ounce on the New York Mercantile Exchange’s Comex division.
The U.S. Dollar Index, a six-currency measure of the greenback’s value, gained as much as 0.3 percent, heading for the longest rally since April. Gold typically moves inversely to the U.S. currency.
“Gold is basically reacting to the stronger dollar,” Sin said. “The dollar is the key driver for gold right now.”
The metal fell to $920.75 in the morning “fixing” in London, used by some mining companies to sell production, from $924 at yesterday’s afternoon fixing. Spot prices are heading for a fifth weekly decline in six.
Oil futures slipped in New York today, heading for the longest losing streak since December, before a report forecast to show an increase in U.S. fuel inventories. Some investors use crude prices as an inflation guide.
Silver, Palladium
Investment in the SPDR Gold Trust, the biggest ETF backed by bullion, was unchanged at 1,120.19 metric tons yesterday, the company’s Web site showed.
Silver for immediate delivery in London fell as much as 1.1 percent to $12.985 an ounce, the lowest since May 4, and was last down 0.5 percent at $13.055. Palladium was 0.5 percent lower at $239.20 an ounce.
Palladium held in ETF Securities Ltd.’s exchange-traded commodities rose 2.3 percent to a record 329,068 ounces yesterday from 321,553 ounces the day before, according to the company’s Web site. Platinum holdings gained 1.5 percent to 328,522 ounces, and silver assets fell 2.6 percent to 18.57 million ounces.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
Last Updated: July 8, 2009 07:14 EDT
