September 24, 2015
Bargain-Hunting Props up Platinum After Rout; Palladium Extends Gains
(Reuters) - Platinum recovered some lost ground on Thursday on bargain-hunting after a four-day rout prompted by fears that demand from the auto industry, where the metal is used in diesel catalysts, could take a hit following the Volkswagen emissions scandal.
Palladium, the predominant metal used in gasoline catalysts, extended gains to a second session, jumping to its highest since mid-July.
Volkswagen AG, the world's biggest carmaker by sales, admitted to U.S. regulators that it programmed its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions.
Platinum is used in diesel catalysts to clean up exhaust emissions.
The driving factor for the metals "is a worry that consumers will swing more in favour of gasoline vehicles, which have palladium heavy autocatalyst loadings with little or no platinum, and away from diesel vehicles, which require heavier platinum loadings in their autocatalysts," said HSBC analyst James Steel.
Spot platinum had risen 1.4 percent to $942.24 an ounce by 0635 GMT, after losing about 5 percent in the past four sessions. The metal on Wednesday dropped to $924.50, its lowest since January 2009.
Platinum got support on Thursday from Japanese traders returning from a three-day holiday.
"The Japanese came in aggressively on the bid this morning, taking the white metal more than $20 higher," said MKS Group trader Jason Cerisola.
Spot palladium climbed to $662.20, its highest since July 14, before paring some gains to trade at $649.80. It logged a near 7-percent jump in the previous session.
Gold also climbed for a second straight session, gaining 0.4 percent to $1,134.56, as Asian shares were subdued after a bruising selloff the previous day.
Worries that an eventual tightening in U.S. monetary policy and slower growth in China could knock the global economy have scared investors, prompting some safe-haven bids for gold.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose for a second straight session, providing some support for prices. The fund added 0.60 tonnes on Wednesday, bringing total holdings to 676.40 tonnes.
Investors will be closely monitoring a speech by Federal Reserve Chair Janet Yellen later in the session for clues on when the U.S. central bank will begin to raise rates.