Platinum slides below $800, further seepage seen
Date: 14-Jun-04
Country: UK
Author: Veronica Brown
Platinum (XPT=: Quote, Profile, Research) , used in jewellery and to clean exhaust emissions, lost over one percent on Thursday in Asian activity, falling through support at $800 an ounce to hit $791 - its lowest since mid-May.
Palladium (XPD=: Quote, Profile, Research) gapped down to levels last seen in January around $213.
"Platinum is poised to test the $750 area, while palladium has room to check out the psychological $200 support," Andreas Maag of UBS Investment Bank said in a daily report.
Both metals had seen gradual price losses in recent days due to an overall lack of buying, compounded by yen strength, which kept Asian buying at bay.
"There has been little support in recent days, and it (platinum) has not looked good on the charts after falling through the moving averages (MAs)," a trader said.
The weakness was exposed starkly after comments from U.S. Federal Reserve Chairman Alan Greenspan on Tuesday, who said the central bank would do what was required to keep inflation in check.
Greenspan's comments injected life into the dollar, wiping the shine off gold as an alternative investment and giving funds an appropriate platform to wash out long positions in some other commodities like copper.
"You still have a bit of a overhang of stale longs across a number of these markets and they remain very nervous given the retracement we saw through April," Barclays Capital analyst Kamal Naqvi said.
"Obviously they were buoyed by the recovery through May, but they remain quite nervous so it wasn't going to take much to reverse that," he added.
Platinum is now some 15 percent down from the 24-year high hit in April at $942 as funds fanned a number of commodities higher.
The metal later gapped down in April on fears that credit controls in China could curb the country's voracious appetite for raw materials.
Analysts had said in April that platinum was seen as the precious metal most likely to bounce strongly due to strong industrial and ornamental demand amid poor supply.
Naqvi said precious metals might move down further overall if the dollar continued to strengthen.
"Next week, however it will be very interesting to see whether or not consumer buying does come in at these lower levels," he added. (Additional reporting by Lewa Pardomuan in Singapore)
