Platinum Falls As Precious Metals Slide

Platinum slid below $1,200 an ounce for the first time in five years and money managers cut bullish bets by the most since 2012 on concern demand is slowing from Europe to China as the appeal of precious metals wanes.

Hedge funds and other speculators reduced their net-long position in New York platinum futures and options by 26 percent in the week ended Sept. 30, the most since May 2012, U.S. Commodity Futures Trading Commission data show. Speculators cut wagers on higher prices 70 percent from a record in July and are now the least bullish this year. The metal last traded little changed after falling as much as 2.8 percent earlier today.

Prices fell 12 percent last quarter after a five-month mine strike ended in June in top producer South Africa and on concern that slowing growth in China and Europe will curb demand for the metal used in catalytic converters and jewelry. Investors are losing faith in the commodity as an accelerating U.S. economy adds to the case for rising interest rates and strengthened the dollar. That curbs precious metals’ allure because they generally only offer returns through price gains.

“It’s a precious metal, so it’s getting the spillover from gold, and it’s an industrial metal,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “At this time that duality is its own worst enemy. The number of longs in the market was huge and there was always a risk that this sort of liquidation would happen.”

Platinum for immediate delivery rose 0.3 percent to $1,228.75 an ounce by 1:09 p.m. in London, after falling to $1,190.25 earlier today, the lowest since July 2009. Prices, which climbed to a 10-month high in July, are down 10 percent this year, set for the first back-to-back annual declines since 1997.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza