Palladium fell to a six-week low and platinum declined in London on concern slower growth will cut demand and as a stronger dollar eroded the metals’ appeal as an alternative investment.
The dollar climbed to a two-week high versus six currencies after a report showed Europe’s economy contracted last quarter and as Greece struggles to complete a bond exchange with private investors by March 8. Richard Fisher, Federal Reserve Bank of Dallas president, said yesterday investors should prepare for less U.S. monetary easing. Platinum and palladium are used more in industry than gold.
“Growth fears and the U.S. dollar strength” are pressuring the metals, Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “Fears over the Greek debt restructuring are weighing on risky assets.”
Palladium for immediate delivery slipped as much as 4.8 percent to $671 an ounce, the lowest level since Jan. 20, and traded at $679.50 by 4 p.m. in London. It’s up 3.7 percent this year. Platinum was 2.8 percent lower at $1,616.50 an ounce after falling to $1,604.50, the lowest price since Feb. 16. It’s gained 15 percent this year.
Europe’s gross domestic product shrank 0.3 percent from the third quarter, the region’s statistics office said today. China cut its forecast yesterday for economic growth to 7.5 percent this year.
Platinum and palladium are mainly used in pollution-control devices in vehicles and jewelry. Concerns about slowing auto sales may be pressuring prices, Fertig said.
Automobile sales in China, the world’s biggest car market, may be having their worst start in seven years as a slowing economy and record gasoline prices keep consumers away from dealerships, according to a Bloomberg survey. The China Association of Automobile Manufacturers will release industry data later this month.
Platinum held in exchange-traded products backed by the metals increased 9.4 percent this year to 43.9 metric tons, the highest level since September, data compiled by Bloomberg show. Palladium assets climbed 11 percent this year to 57.4 tons.
Gold’s premium to platinum was at 3.3 percent today, compared with as much as 15 percent at the close on Jan. 6, according to data compiled by Bloomberg. The premium dropped to 0.8 percent on March 2. Gold declined as much as 2.5 percent in London today and silver slipped as much as 4.2 percent.
“Besides the general decrease in prices of precious metals, the restart of production at the world’s largest platinum mine, Rustenburg in South Africa, is weighing on the price,” Commerzbank AG analysts in Frankfurt wrote today in a report.
Impala Platinum Holdings Ltd. remains on target to restart operations at the mine after a stoppage of more than five weeks over a pay dispute, spokesman Johan Theron said today.