LONDON — Platinum gained more than 1.5 per cent on Tuesday, lifted by bargain-hunting and after a major producer announced mine closures while gold prices were range-bound.
A key industry report from the world's top platinum refiner Johnson Matthey said prices could fall to $700 (U.S.) an ounce over the next six months if the economic crisis continues and investors keep shunning the metal used to make autocatalysts.
There was little market reaction to the report, but investors focused instead on news of Lonmin, the world's third-biggest platinum producer, closing some high-cost mines and cutting costs to survive a market downturn.
Spot platinum was at $817.50/837.50 an ounce by 1522 GMT, after hitting a session high of $821.50 an ounce and compared to $808 an ounce in New York late on Monday.
“We have uncertainties over the supply now,” said PGM trader Rory McWeigh at Commerzbank in Germany. “Even profitable mining companies, like Lonmin, are not looking to develop (mines) due to expenses and the decline in price,” he said.
Platinum spiked to a record $2,290 an ounce in March mainly due to a power shortage in main producer South Africa that disrupted mining. But the price has since fallen sharply, tracking declines in gold, hit by the banking crisis, the global economic slowdown and deteriorating car sales.
More than 60 per cent of platinum is used in autocatalysts to clean exhaust fumes.
The Johnson Matthey report also said that global demand for platinum catalytic converters from automakers will climb 2 per cent to 4.23 million ounces in 2008 on higher consumption in Europe and emerging economies, despite a heavy decline in North America.
“It is finding a floor around $800 an ounce,” analyst Walter de Wet at Standard Bank in Johannesburg said. “The market has probably priced in all the weakness in demand,” he said.
Gold was steady, taking its cue from the currency markets, where the euro was mainly flat against the U.S. dollar at $1.2652.
Spot gold was trading at $739.20 an ounce, higher from $735.90 an ounce in New York late on Monday. Bullion has lost nearly 30 per cent in value since hitting a record of $1,030.80 in March.
“The bullish story on gold based on fears of inflation is dead,” Jesper Dannesboe, senior commodity strategist at Societe Generale, said.
“Because now it is disinflation and even deflation. With the oil prices going down the way they are it is very difficult to hold onto long gold positions unless the dollar was to collapse, which is not the case.”
The U.S. dollar climbed versus the yen, boosted by a steady performance in the U.S. stock market after stronger-than-expected results from Hewlett Packard partly eased fears about a global slowdown.
Oil rose above $55 a barrel, after a slide to a new 22-month low earlier in the session, depressed by the gloomy outlook for the world economy.
New York gold futures fell $3.4 an ounce to $738.7.
Silver was at $9.42/9.50 an ounce versus $9.27 and palladium at $209.50/217.50 an ounce from $214.50.
