By Stuart Wallace
Sept. 11 (Bloomberg) -- Platinum retreated to a 20-month low and palladium to its lowest since October 2005 on expectations flagging car sales will curb demand for the metals used in autocatalysts. Gold dropped to its weakest since October.
Ford Motor Co., the second-biggest U.S. automaker, yesterday said it would cut jobs in Canada as it reduces North American output by 30 percent in the second half. 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.
``The autocatalyst makers are decreasing their stockpiles because the prognosis for car sales is very bad,'' Bayram Dincer, a commodity research analyst at Dresdner Bank AG in Zurich, said by phone. That's ``having a huge impact on the platinum price.''
Platinum for immediate delivery fell as much as $49.35, or 4.2 percent, to $1,130.65 an ounce in London, the lowest since Jan. 12, 2007. The metal traded down $25.25 at $1,154.75 as of 11:06 a.m. local time. Platinum has dropped 50 percent from a record $2,301.50 reached March 4.
Dincer said he expects a ``volatile consolidation phase'' in the next week or two, with prices trading at $1,125 to $1,200 and a year-end target of $1,300. ``I don't see this as a buying opportunity,'' he said.
Prices surged in the first quarter after South Africa restricted power supplies to mines to cope with an energy shortage. The country 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.
Palladium Declines
Palladium for immediate delivery fell as much as $11, or 4.8 percent, to $216.75 an ounce, the lowest since Oct. 26, 2005. The metal last traded down $5 at $222.75. Palladium rose as high as $595 on March 4, compared with a record $1,125 in January 2001.
Platinum futures sank to a 30-month low on the Tokyo Commodity Exchange, while palladium slumped to its lowest in almost three years.
Gold for immediate delivery in London fell $10.05, or 1.3 percent, to $742.40 an ounce, after earlier trading at $739.05, the lowest since Oct. 10, 2007. The metal declined as the dollar strengthened against currencies including the euro, diminishing the appeal of gold as a hedge against a weaker U.S. currency.
``With the bears still in the driving seat and investors continuing to free up cash in their most liquid assets, gold looks set to remain under pressure,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report.
Assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, fell 2.7 percent to 614.35 metric tons yesterday, according to figures on the company's Web site.
Silver fell 0.49 cent, or 0.1 percent, to $10.68 an ounce. It earlier traded at $10.61, the lowest since October 2006.
To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net
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