Platinum Heads for Weekly Gain in London; Gold Little Changed

By Nicholas Larkin

Jan. 9 (Bloomberg) -- Platinum headed for a fifth weekly gain, the best winning streak since February, as U.S. government plans to bolster the economy may increase demand. Gold was little changed.

Platinum, used in autocatalysts, has increased as President- elect Barack Obama proposed a $775 billion stimulus, while the Treasury pledged $13.4 billion to help General Motors Corp. pay bills. The metal’s 39 percent drop last year forced some companies to lower output from South Africa.

“The stimulus plans are helping,” Gerry Schubert, a director at Fortis in London, said by phone today. “The negative factors have now mostly been included” in prices, he said.

Platinum for immediate delivery climbed as much as $9.50, or 1 percent, to $1,002.50 an ounce and traded 0.4 percent lower at $989.50 by 12:42 p.m. in London. The metal, heading for a 4.5 percent increase this week, is up 5.9 percent this year. Still, Investec Bank (U.K.) Ltd. and Nomura International Plc cut their price forecasts on expected lower vehicle demand.

Investec said platinum will average $970 an ounce this year, 28 percent less than previously expected. The bank sees a supply surplus of 127,000 ounces in 2009, compared with an estimated 78,000-ounce deficit last year and a 300,000-ounce deficit next year.

Nomura lowered its 2009 forecast by 27 percent to $950 an ounce. Deutsche Bank AG expects the metal to average $1,013 an ounce, a gain of 9.5 percent from its previous estimate.

“Our main concern for PGM prices is continued weakness in vehicle sales,” Rebecca O’Dwyer, an analyst at Investec, said in a report. “The state of the auto market is critical.”

New Technology

Automakers account for about half of global platinum and palladium consumption. Mazda Motor Corp. yesterday said it developed new autocatalyst technology for its Mazda3 vehicle due for sale this year that uses about 70 percent less precious metal than the previous model.

“Given the spike in precious metal prices in the past year, this could be a huge benefit to Mazda and whoever they share the technology with,” UBS AG analyst John Reade said today in a note.

Gold is heading for a weekly loss of 1.9 percent, the first reverse since the beginning of December. The dollar has gained 1.6 percent against the euro this week, reducing bullion’s appeal as an alternative investment to the U.S. currency.

Gold for immediate delivery added $1.14, or 0.1 percent, to $858.54 an ounce. February futures rose $4.40, or 0.5 percent, to $858.90 in electronic trading on the Comex division of the New York Mercantile Exchange.

Employment Woes

The metal slipped to $854 in the morning “fixing” in London, used by some mining companies to sell production, from $855.75 at the afternoon fixing yesterday.

The U.S. probably lost 525,000 jobs in December, capping the biggest collapse in employment since the end of World War II, according to a Bloomberg survey of economists. The Labor Department is scheduled to release the report, the last under President George W. Bush’s watch, at 8:30 a.m. in Washington.

“That loss could be much greater than anticipated, putting the dollar under further pressure,” James Moore, an analyst at TheBullionDesk.com in London, wrote today in a note. Gold typically moves in the opposite direction to the dollar.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was at 787.6 metric tons yesterday. It reached a record 787.9 tons on Jan. 6.

Amongst other metals for immediate delivery in London, silver advanced to $11.255 an ounce, and palladium was 0.1 percent lower at $196.50 an ounce.

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