BLBG: Platinum Futures Fall as Dollar Strengthens; Palladium Gains
June 12 (Bloomberg) -- Platinum fell in New York, heading for the first weekly drop since mid-May, as the dollar strengthened after a report showed a record plunge in European industrial production. Palladium gained.
In April, manufacturing in the 16-member euro region fell the most since the data series began in 1986, the European Union’s statistics office said today. The dollar’s rally eroded the appeal of the precious metal. Most platinum is used in auto parts. Some investors buy the metal as a store of value when the dollar falls.
“The unexpected weakness in Eurozone industrial production is causing traders to re-evaluate previously bullish sentiment in the euro,” said Tom Pawlicki, an analyst at MF Global in Chicago.
Platinum futures for July delivery fell $21.60, or 1.7 percent, to $1,251.50 an ounce at 10:21 a.m. on the New York Mercantile Exchange. The most-active contract was down 2.7 percent for the week, after surging 26 percent in three weekly gains. The metal climbed 35 percent this year before today.
Palladium futures for September delivery rose 45 cents, or 0.2 percent, to $256.45 an ounce on the Nymex. The price has lost 1.3 percent for the week, after gaining for three straight weeks. Palladium advanced 36 percent this year through yesterday.
“We suspect that there is more to go on the downside, perhaps as we start the new week,” Edward Meir, an MF Global Ltd. analyst in Darien, Connecticut, said in a report on the metals.
EU Industrial Production
Output in the euro region dropped 21.6 percent in April from a year earlier. Economists expected a 19.8 percent decline, according to a Bloomberg News survey. From March, output declined 1.9 percent.
The dollar strengthened 0.9 percent to $1.3976 per euro in New York, from $1.4108 yesterday.
“In our view, commodity markets are still quite overbought, with the steep run-up in prices arguably over- compensating for the modest brightening we are seeing in the U.S. macro picture,” Meir said. “In addition, we are still somewhat nervous about the U.S. stock market.”
