By Nicholas Larkin
Dec. 12 (Bloomberg) -- Platinum dropped in London after the U.S. Senate rejected a bailout plan for carmakers, threatening to deepen a global recession and sap demand for the metal used mainly in autocatalysts to cut exhaust fumes. Gold also fell.
Commodities and stocks slid after senators voted down a bill to provide $14 billion of emergency funds for General Motors Corp. and Chrysler LLC, which may run out of cash early next year. Automakers make up about half of world platinum and palladium demand, according to estimates by Johnson Matthey Plc.
“The news of the bailout failure is bearish for platinum group metals,” Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, said by phone today. “We’ve seen a massive fall in metals demand” because of the economic downturn, he said.
Platinum for immediate delivery lost as much as $28.50, or 3.4 percent, to $807.50 an ounce and traded at $811.50 by 10:51 a.m. London time. The metal has plunged 65 percent from its March record of $2,301.50 and is down 47 percent this year.
Auto sales in the U.S. dropped 37 percent in November from a year earlier, with cars and light trucks sold at the lowest annual rate in 26 years. A report yesterday showed initial jobless claims in the country surged to a 26-year high.
Platinum miners in South Africa, accounting for almost 80 percent of world supply, need to cut production to raise prices, according to Impala Platinum Holdings Ltd. Without cut backs from South Africa, “the agony will continue in 2010,” said the company’s marketing director Derek Engelbrecht.
“While the news from the U.S. automakers may generate some bearish sentiment, the ongoing downgrading of production forecasts should see the metal remain near equilibrium,” and “for the time being” trade at $780 to $880, James Moore, an analyst at TheBullionDesk.com, wrote in a note.
Gold Slips
Gold slipped from its highest in more than two weeks. Bullion for immediate delivery declined $7.52, or 0.9 percent, to $813.83 an ounce in London. Futures for December were $12.80, or 1.6 percent, lower at $813.80 in electronic trading on the Comex division of the New York Mercantile Exchange.
The yellow metal, still heading for a weekly gain of 7.6 percent, fell to $813.75 in the morning “fixing” in London used by some mining companies to sell production, from $827.75 at the afternoon fixing yesterday.
Goldman Sachs Group Inc. yesterday raised its 12-month forecast for gold to $795 an ounce, from $710, because the dollar will resume its decline, boosting gold’s appeal as an alternative investment to the U.S. currency.
“If we see more dollar weakness it should support gold,” De Wet said. “People are buying on dips and selling on highs. They’re not willing to take major positions as year end nears.”
Inflation Hedge
The dollar today snapped two days of declines against the euro, adding 0.3 percent. Gold may also have been helped lower as crude oil slid 6 percent to $45.09 a barrel in New York. Some investors buy gold as a hedge against inflation.
Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, expanded by more than 4 metric tons to 762.17 tons, according to the company’s Web site. The fund was at a record 770.64 tons Oct. 13, overtaking Japan as the world’s seventh-largest gold holding. Bullion assets held in exchange- traded funds managed by ETF Securities Ltd. rose to 1.739 million ounces, from 1.708 million ounces on Dec. 4.
Platinum holdings declined to 166,044 ounces, from 166,158 ounces, ETF Securities’ Web site showed. Palladium and silver assets were also lower.
Among other metals for immediate delivery, silver lost 2 percent to $10.1475 an ounce and palladium was $6, or 3.3 percent, lower at $175 an ounce.
To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net
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