SINGAPORE (Reuters) - Gold steadied above $730 an ounce on Tuesday as oil regained some footing, while recent gains in the yen against the dollar spurred buying in platinum ahead of the release of a supply and demand report by refiner Johnson Matthey (JMAT.L: Quote, Profile, Research, Stock Buzz).
Speculators in Japan pushed up platinum to a one-week high of $860 an ounce on Monday on expectations Johnson Matthey would release another market-friendly report despite poor car sales, which threatened to slash demand for autocatalysts.
U.S. automakers have been hit by a collapse in consumer spending, and fears of a global financial crisis mounted as Japan's economy minister warned of a prolonged recession while Citigroup (C.N: Quote, Profile, Research, Stock Buzz) said it was cutting 52,000 jobs.
Platinum was trading at $816.00 an ounce, up $8.50, with dealers reporting bargain buying by speculators in Japan.
"I guess the buying is mostly driven by the strengthening of the yen and not by physical demand. The biggest users of platinum are the automakers and there's not much demand. The financial crisis carries on," said a dealer in Hong Kong.
Platinum spiked to a record of $2,290 an ounce in March after a power shortage in main producer South Africa disrupted mining but the price has since fallen sharply to track declines in gold, and recently due to turmoil in the auto industry.
More than 60 percent of platinum use goes to autocalysts to clean exhaust fumes.
"I think the auto sector will definitely be a major factor here and talk is now on the large automakers such as General Motors, Chrysler, etc, and how they are going to get help from the governments to ride out the financial crisis," said Adrian Koh, analyst Phillip Futures.
"Perhaps the JM outlook due today may provide a bit of insight on how the platinum markets may be doing over the next few months."
Johnson Matthey said in May the platinum market could close 2008 in a significant deficit due to output shortfalls.
"What I know is you will either see buying or selling in platinum before the report. This time we are seeing some buying. So perhaps, people in Japan expect Johnson Matthey to say the market is still in a deficit," said a dealer in Tokyo.
U.S. Senate Democrats took the first step toward bailing out the nation's crippled auto industry on Monday by proposing a $25 billion loan program, a plan that faces stiff political headwinds with millions of jobs potentially riding on the outcome.
Gold was trading at $736.50 an ounce, up $0.60 from New York's notional close on Monday, when it traded in a volatile $18 range. Bullion has lost nearly 30 percent in value since hitting a record of $1,030.80 in March.
"From the gold charts, the trading ranges seemed to be narrowing over the past couple of weeks. So I am expecting a much clearer direction to appear over the near-term," said Koh of Phillip Futures. "I think the dollar's still going to be the driver here."
Gold, which has slipped since hitting a two-month high of $931 an ounce in early October, could find resistance around last week's highs around $750, said Koh.
Oil inched up above $55 a barrel on Tuesday, having settled at its lowest in nearly 22 months.
The dollar inched up to 96.66 yen, while the euro eased to $1.2642 but dealers said the Japanese currency was underpinned by risk aversion as Tokyo shares slipped on deepening concerns about a global recession.
