Platinum Futures Gain as Oil Stokes Concern Inflation Rising

By Dave McCombs

July 11 (Bloomberg) -- Platinum futures in Tokyo had the biggest gain in a month as oil yesterday surged more than $5 a barrel, spurring speculation that higher energy prices will fuel demand for precious metals as a hedge against inflation.

Precious metals including platinum have drawn investors seeking protection against climbing consumer prices and a weakening dollar. Oil jumped 4 percent yesterday in New York amid concern a threatened strike in Brazil may disrupt supply.

``Oil was sharply higher in New York, so platinum is being bought today,'' Kazuhiko Saito, a commodity strategist at Interes Capital Management, said today in Tokyo by telephone.

Platinum for June delivery in Tokyo gained 160 yen, or 2.4 percent, to 6,884 yen a gram ($2,001 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange. The most-active contract earlier jumped as much as 2.9 percent, the biggest gain since June 6.

Metal for immediate delivery advanced $20.50 to $2,027 an ounce at 12:07 p.m. in Tokyo, 1 percent higher than late yesterday in New York.

Gains in platinum may be limited as higher oil prices raise concern that demand for autos and exhaust filters that use platinum may decline, said Saito. Prices for platinum futures in New York may drop below $2,000 an ounce and ``target'' $1,950 next week, he said.

Platinum futures for October delivery rose $32.60, or 1.6 percent, to $2,031 an ounce at 11:37 a.m. Tokyo time, in after- hours trading on the New York Mercantile Exchange.

Brazil's Oil Workers Confederation is planning a five-day strike from July 14 against Petroleo Brasileiro SA on platforms in the offshore Campos Basin, the source of 80 percent of the country's supply, a union official said. Oil also rose after Iran test-fired more missiles in the Persian Gulf and a Nigerian militant group said it will end a cease-fire this week.

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