By Halia Pavliva Dec. 16 (Bloomberg) -- Platinum rose to a two-week high in New York as the dollar fell, boosting demand for the metal as an alternative investment. Palladium also gained. The dollar fell to a two-month low against the euro on speculation that the Federal Reserve would cut its target bank- lending rate to near zero today. The U.S. central bank did just that after metals settled in New York. The yen neared a 13-year high against the U.S. currency. Some investors buy commodities, including platinum, to preserve value when the dollar falls. “Mostly all the eyes are on the U.S. dollar,” Miguel Perez-Santalla, a sales vice president a Heraeus Precious Metals Management in New York, said in a note. Platinum futures for January delivery rose $10.30, or 1.2 percent, to settle at $849.50 an ounce on the New York Mercantile Exchange, the highest close since Nov. 28. The metal, used in jewelry and emissions-control parts for car and truck engines, has tumbled 44 percent this year. Palladium futures for March delivery gained 5 cents to settle at $177.55 an ounce. The price has plunged 53 percent this year. Platinum traded near the price of gold after the Fed trimmed its benchmark lending rate to a target range of zero to 0.25 percent, from 1 percent. Both metals rallied on the move, with platinum rising to as much as $866.80 and gold touching $860.80. Platinum sold for less than gold last week for the first time since at least 1996 on concern that the U.S. auto industry may collapse, curbing platinum demand. Automakers account for 60 percent of global platinum use, according to Johnson Matthey Plc, a London-based metals trader and manufacturer. Recession Effects The first simultaneous recessions in the U.S., Europe and Japan since World War II have dragged platinum futures down 64 percent from a record $2,308.80 an ounce on March 4. The metal rose as the Fed cut rates from 5.25 percent in September 2007 in an unsuccessful attempt to fend off a recession, which began a year ago. Auto sales in the U.S. fell 37 percent last month to the lowest annual pace in 26 years as consumers coped with the first recession since 2001. November car sales also tumbled in Europe, dropping 26 percent in the biggest monthly decline since 1999, based on vehicle registrations, an industry group said today. “The weaker dollar should theoretically invigorate commodity prices, as it provides non-U.S. consumers with extra purchasing power,” Edward Meir, an analyst at MF Global Ltd. in Darien, Connecticut, said today in a report. “However, with most economies outside of the U.S. also sinking into recession, we cannot make much of a case for a foreign-driven demand boost. Instead, we expect weaker macro readings to prevail.” To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

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