Platinum, Palladium Fall on Signs of Slumping U.S. Economy

By Halia Pavliva

Sept. 26 (Bloomberg) -- Platinum tumbled the most in a week and palladium declined as the sagging U.S. economy signaled declining demand for the metals used in car and truck parts.

U.S. gross domestic product expanded more slowly than estimated in the second quarter, showing consumer spending was weakening before the credit crisis intensified. Platinum consumption by automakers accounts for more than 60 percent of global demand.

``All economic reports of late are pointing to a significant recession, and the platinum-group metals are suffering from that,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in a report.

Platinum futures for January delivery fell $48.10, or 4 percent, to $1,143.10 an ounce at 9:40 a.m. on the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop for a most-active contract since Sept. 16. Before today, the metal tumbled 48 percent from a record $2,308.80 on March 4.

Palladium futures for December delivery dropped $4.95, or 2 percent, to $237.50 an ounce. Before today, the price declined 36 percent this year.

The metals are used in jewelry and pollution-control devices in cars.

The U.S. economy's expansion rate of 2.8 percent was less than an estimate of 3.3 percent last month, Commerce Department data showed today. Personal consumption, trade and business investment contributed less to GDP than the prior estimate.

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