Platinum, Palladium Rise in N.Y. as Dollar Falls Against Euro

By Halia Pavliva

July 31 (Bloomberg) -- Platinum and palladium rose in New York as the dollar fell against the euro, fueling demand for metals as an alternative investment.

The dollar fell as much as 0.8 percent, ending a two-day rally against the European currency. Some investors sell metals priced in dollars, including platinum and palladium, when the greenback gains. The dollar fell 6.8 percent against the euro this year before today, while platinum rose 14 percent. The metal gained 33 percent in 2007.

``The weaker dollar helps support the metals prices,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said today in a note. ``However, from my point of view, the precious metals continue to look weak.''

Platinum futures for October delivery jumped $24, or 1.4 percent, to $1,762.10 an ounce at 9:59 a.m. on the New York Mercantile Exchange.

Palladium futures for September delivery rose $7.20, or 1.9 percent, to $382.90 an ounce. The price fell 19 percent this month through yesterday. Most-active futures sank 22 percent in March.

``Despite the recent moves higher, we would still be wary about chasing this latest bounce in metals,'' Edward Meir, an MF Global Ltd. analyst in Stamford, Connecticut, said in a report.

Platinum, which gained 36 percent this year through June, tumbled 16 percent this month before today, partly because of slumping car sales, and is headed for the worst one-month plunge in 21 years. U.S. auto sales fell to the lowest annual rate in 15 years last month. Most platinum consumption is for auto emissions-control parts.

Damaging Sentiment

``The U.S. auto-sales horror story, together with some negative news out of the European car companies, was sure to damage platinum sentiment,'' John Reade, the head of UBS AG metals strategy in London, said today in a report. ``We believe that platinum is now attractively priced and that investors looking to buy good amounts should scale into platinum at current levels.''

The dollar fell against the euro as reports showed the U.S. economy grew less than forecast in the second quarter and that initial jobless claims rose last week.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.