Platinum Drops to 15-Month Low as Dollar Gain Cuts Demand

Platinum fell to the lowest in 15 months as a surge in the dollar cut demand for precious metals as alternative investments. Palladium dropped to the cheapest since April.

Holdings in exchange-traded products backed by platinum are at a four-month low after expanding to a record in July. The Bloomberg Dollar Spot Index, a measure of the greenback against 10 currencies, reached the highest since June 2010 today. Gold and silver also fell this week.

Platinum retreated 12 percent since the end of June, on pace for the biggest quarterly loss in more than a year, amid signs of slowing economic growth in Europe. The region accounts for 25 percent of global demand. Prices are headed for a third straight monthly loss after workers in June ended a strike that disrupted mine output in South Africa, the world’s biggest producer.

“The dollar is killing all precious metals,” said Lance Roberts, who helps oversee $600 million as chief strategist for STA Wealth in Houston. “Worries about demand from Europe are also keeping prices subdued.”

On the New York Mercantile Exchange, platinum futures for January delivery fell 1.1 percent to close at $1,301.10 an ounce at 1:14 p.m. After the settlement, prices touched $1,299.20, the lowest since June 28, 2013.

Trading more than doubled compared with the 100-day average for this time, according to data compiled by Bloomberg.

The metal, used in pollution-control devices in cars, declined 5.3 percent in 2014. Prices climbed 7.9 percent in the first half of the year as a five-month strike disrupted mine production in South Africa. The stoppage ended in late June, and the metal retreated 3.9 percent over the next two months.

Falling Volatility

“Platinum looks oversold, but lacks investors,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note on Sept 24. Signs of slowing economic growth in Europe “may have reduced expectations of auto output and demand,” he said.

The 60-day historical volatility this week reached the lowest since February 1997 amid fading investor interest, according to data compiled by Bloomberg. The net-long position in New York futures and options reached a seven-month low in the week ended Sept. 16, U.S. government data show.

Also on the Nymex, palladium futures for December delivery fell 2.4 percent to $783.80 an ounce, after touching $778, the lowest since April 24.

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