Platinum Futures Gain as Gold Rally Lures Investors to Metals

By Dave McCombs

July 29 (Bloomberg) -- Platinum futures in Tokyo gained for a second day as a rally in gold boosted optimism about precious metals, prompting some traders to buy out of short positions, or bets on declines in platinum.

Platinum rebounded after touching a four-month low last week as rising oil prices and declines in equities helped gold advance for a fourth day in Asian trading. Some investors buy precious metals as a hedge against inflation and declines in stock prices.

``Bullish gold is positive for platinum today,'' Kazuhiko Saito, a commodity strategist at Interes Capital Management, said in Tokyo by phone. ``Traders are covering their shorts in platinum.''

Platinum for June delivery jumped 24 yen, or 0.4 percent, to 6,055 yen a gram ($1,741 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. The most-active contract fell to 5,857 yen a gram on July 24, the lowest since March 25.

Metal for immediate delivery fell $4 to $1,771 an ounce at 11:26 a.m. Tokyo time, 0.2 percent lower than yesterday in New York.

Traders are awaiting figures on U.S. car sales due this Friday amid expectations plummeting demand for autos will also cut demand for platinum used in exhaust systems, Saito said.

``The market will probably turn down after the release and platinum may drop below $1,700 an ounce,'' he said.

Toyota Motor Corp., vying with General Motors Corp. to be the world's largest carmaker, yesterday lowered its sales and production forecast for this year as record U.S. gasoline prices erode sales of trucks and sport-utility vehicles.

To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net