Economic Calendar

Tuesday, January 13, 2009

Platinum Declines as Weaker Car Sales Curb Demand; Gold Drops

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By Nicholas Larkin

Jan. 13 (Bloomberg) -- Platinum fell for a second day in London as a decline in car sales trimmed demand for the metal used in autocatalysts. Gold dropped to a one-month low.

PSA Peugeot Citroen, Europe’s second-biggest carmaker, reported vehicle sales declined 8.7 percent last year. Sales in China may climb at the slowest pace since 1998, the China Association of Automobile Manufacturers said yesterday.

“The last few months of the year was pretty poor” for Chinese carmakers, Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland’s four bullion refiners, said by phone from Geneva.

Platinum for immediate delivery dropped as much as $35.50, or 3.7 percent, to $923 an ounce and traded at $937 by 12:40 p.m. in London. The metal had advanced as much as 6.3 percent this year and is now little changed. It fell 39 percent last year, its worst performance since at least 1987.

Automakers account for about half of global platinum and palladium consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. The figures take recycling into account.

“The outlook for commodity prices is poor,” Investec Securities, which cut its 2009 forecasts for most industrial metals, said in a report today. The bank expects platinum will average $970 an ounce this year. RBC Capital Markets today cut its 2009 forecast for the metal to $1,100 an ounce, from $1,150.

Gold earlier dropped to a one-month low. The dollar strengthened against the euro and oil prices extended losses, reducing demand for the metal as an alternative investment to the U.S. currency and hedge against inflation.

Electronic Trading

Bullion for immediate delivery declined as much as $6.19, or 0.8 percent, to $814.66 an ounce and last traded at $816.54. The metal has declined 7.4 percent this year. February futures lost $4.60, or 0.6 percent, to $816.40 in electronic trading on the Comex division of the New York Mercantile Exchange.

The dollar strengthened as much as 1.1 percent against the euro as traders increased bets the European Central Bank will reduce interest rates this week. Crude oil fell for a sixth day, sliding as much as 4 percent on speculation that slumping demand caused U.S. crude inventories to accumulate.

Gold “came under pressure again from heavy crude and a firmer U.S. dollar,” UBS AG analyst John Reade said today in a note. Reade expects the metal to trade at $800 an ounce in one and three months from now, with prices dropping lower if the dollar gains and industrial metals and oil prices fall further.

Bullion slipped to $815.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $827 at the afternoon fixing yesterday.

Among other metals for immediate delivery in London, silver fell 0.9 percent to $10.56 an ounce and palladium was 1.9 percent lower at $183 an ounce.

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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