Platinum Declines to 18-Month Low in London as Car Sales Slow

By Stuart Wallace

Sept. 10 (Bloomberg) -- Platinum fell to an 18-month low in London and palladium reached its lowest since November 2005 on concern that slowing car sales will sap demand for the metals, used in autocatalysts. Gold and silver were little changed.

U.S. auto sales dropped to a 15-year low in July and Toyota Motor Corp., the world's second-largest carmaker, is cutting production in Europe. Passenger car sales in China fell for the first time in three years last month, the China Association of Automobile Manufacturers said yesterday.

``The precious complex continues to be hard hit by aggressive fund liquidation,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report today.

Platinum for immediate delivery fell as much as $12.95, or 1.1 percent, to $1,222.55 an ounce in London, the lowest compared with intraday prices since March 2007. The metal traded down $8.75 at $1,226.75 as of 8:15 a.m. local time. Platinum has dropped 47 percent from a record $2,301.50 reached March 4.

Prices had jumped as much as 46 percent in the first two months of the year after South Africa restricted power supplies to mines to cope with an energy shortage. South Africa accounts for about three-quarters of world platinum supply, according to Johnson Matthey Plc.

About half of demand comes from carmakers, taking into account recycling from used autocatalysts. Jewelry and the chemical and electrical industries make up most of the rest of consumption.

``With sentiment across the complex looking distinctly negative in the short-term, platinum may now challenge to $1,195/1,145,'' Moore said.

Palladium Plunges

Palladium for immediate delivery fell as much as $10.25, or 4.4 percent, to $222.75 an ounce, the lowest since Nov. 4, 2005. The metal traded down $5.75 at $227.25 as of 8:15 a.m. local time. Palladium traded as high as $595 on March 4, still below its record $1,125 in January 2001.

Platinum and palladium futures on the Tokyo Commodity Exchange plunged by the exchange-imposed daily limits.

Gold for immediate delivery in London fell 90 cents, or 0.1 percent, to $776.35 an ounce. Silver advanced 3 cents, or 0.3 percent, to $11.30 an ounce.

Assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, fell 1.7 percent to 631.2 metric tons yesterday, according to figures on the company's Web site.

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net