Platinum Declines as Climbing Dollar Trims Investment Demand

By Dave McCombs

Aug. 15 (Bloomberg) -- Platinum fell for the sixth time in seven days in Asian trading as gains in the U.S. currency against the euro damped demand for precious metals as protection against a weaker dollar. Gold and silver also plunged.

Precious metals sank after the U.S. government reported consumer prices rose at the fastest pace in 17 years in July, limiting the Federal Reserve's ability to lower interest rates as economic growth slows and prompting a surge in the dollar.

``The dollar was the gateway,'' for the drop in precious metals, Jon Nadler, a senior analyst at Kitco Minerals & Metals Inc. in Montreal, said by telephone today. ``Investors see that the Fed is resolved to fight inflation by hiking rates,'' which may help push up the dollar, he said.

Platinum for immediate-delivery dropped $38.50 to $1,452.50 an ounce at 10:57 a.m. in Tokyo, a 2.6 percent decline from yesterday in New York and the lowest since Dec. 3, 2007.

Platinum for June delivery fell 5.4 percent to 5,105 yen a gram ($1,442 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange.

The dollar headed for a fifth weekly gain against the euro, its longest winning streak in more than two years. The U.S. currency climbed to $1.4753 versus the euro, the strongest since Feb. 21, and traded at $1.4780 at 11:01 a.m. in Tokyo.

Gold for immediate delivery fell as much as $17.15 to $789.47 an ounce, a 2.1 percent decline from yesterday in New York and the lowest since Dec. 17.

Immediate-delivery silver plunged as much as 12.1 percent to $12.46 an ounce, the lowest since Sept. 14.

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