Platinum fell today, the most in four months on speculation that demand from the auto industry would drop, since that is where it is mostly consumed, while output has stabilized. Palladium also dropped. Platinum closed at $ 1,630.00, down by $ 106.00, and Palladium closed at $ 365.00, down $ 14.00 as of the NYME close on August 1, 2008.
US auto sales remained at the lowest annual rate in 15 years, in July 2008. That fueled concerns that demand will decline for platinum and palladium for auto-emissions control parts. Production in South Africa, the source of 78% of the world's supply, has stabilized after power shortages disrupted mines in January. As of August 1, 2008 the production of Platinum was reported at 36,282 ounces.
The rout in the platinum group of metals continues to unfold, a senior analyst said. The automobile manufacturers reports, and a brighter supply outlook out of South Africa continue to present a hurdle to price advances.
Platinum futures for October delivery tumbled $ 106.00, or 6.1%, to $ 1,630.00 an ounce on the New York Mercantile Exchange (NYME), the biggest one day drop since March 7. The most active contract slid 5.9% this week, the third straight weekly decline .
Palladium futures for September delivery sank $ 14.00, or 3.2%, to $ 365.00 an ounce. The price dropped for a sixth consecutive week, declining 3.1%. The most active futures fell 17% last month, the biggest such decline since a 22% plunge in March.
General Motors, Ford Motor and Toyota Motor Corp.'s US reported declined sales last month, record gasoline prices depressed demand, for trucks and large vehicles, and a slowing economy kept consumers away from dealer lots. Ford Motor reported a 15% drop from a year earlier, Toyota's sales fell 12%, and GM posted a 27% decline.
The Platinum group metals have been hit the strongest as investors believe they have hit their top and want to be in the more liquid gold, where they can get in and get out quickly. With platinum below $ 1,700 an ounce, it is expected that good industrial buying in South American countries will occur.
Platinum, which gained 36% this year through June, tumbled 15% in July, partly because of poor automobile sales. It was the biggest one month drop since December 1988.
Platinum reached a record $ 2,308.80 on March 4, 2008 partly because of output cuts in South Africa. But, by May, precious metal output, except for gold, rose at a 2.6% annual pace, according to Statistics in South Africa.
Platinum fell as the dollar rose against the Euro, following a government report that showed US employers eliminated fewer jobs in July than the analysts had forecasted. Some investors sell metals priced in dollars, and that includes platinum and palladium, when the US Currency gains.
The dollar rose 0.6% against the Euro, heading for its biggest weekly gain since June 13. The dollar traded at $ 1.5541 per Euro, up 3.1% from a record low reached on July 15, 2008 against the European currency.
Dollar traders are also anticipating further strength in the currency as conditions in Europe continue to pressure the Euro towards the $ 1.54 level.