Platinum reaches 6-year low on China demand concern; gold steady

[LONDON] Platinum fell to a six-year low and palladium reached the lowest since 2012 on speculation supplies are ample amid slowing demand from China. Gold was little changed.

BMW AG said on Tuesday it cut production by 16,000 cars in China and slowing sales may lead it to revise profitability goals. The country accounts for at least 23 per cent of global demand for platinum and palladium, which are mainly used in catalytic converters that curb harmful car emissions, Johnson Matthey Plc estimates.

Commodities have slumped as China's economy expands at the slowest pace in 25 years, leading to gluts in everything from metals to crops. Platinum mine output is rebounding in top producer South Africa after a five-month strike last year. Faith in precious metals has soured as the Federal Reserve prepares to raise interest rates, cutting the allure of investments that don't give returns like other assets such as equities and bonds.

"What is missing right now is a significant element of demand from China," Jonathan Butler, a precious-metals strategist at Mitsubishi Corp in London, said by phone.

"If miners sell as much metal in the second half of the year as they did in the first, prices could be under more pressure." Platinum for October delivery lost 1.1 per cent to US$956.30 an ounce by 8:07 am on the New York Mercantile Exchange. It earlier fell as much as 2.2 per cent to the lowest since January 2009. Palladium futures were down 1.4 per cent at US$594.75 an ounce.

Gold futures were little changed at US$1,090.60 an ounce on the Comex in New York. They reached a five-year low on July 24.

Investors bought bullion through exchange-traded products for the first time since mid-July, increasing holdings by 0.2 metric ton to 1,523.6 tons, data compiled by Bloomberg show.

Silver was little changed at US$14.51 an ounce in New York.

BLOOMBERG