Platinum fell to the lowest in almost seven weeks in London, narrowing its premium to gold, on reduced concern that South African supply will be disrupted and amid an election stalemate in Italy.
Gold was little changed.
The Association of Mineworkers and Construction Union signed an accord yesterday aimed at keeping peace and stability in the mining industry in South Africa, the biggest platinum producer, days after the country’s largest union endorsed the plan.
Global equities fell to the lowest in almost six weeks and the euro reached a seven-week low against the dollar earlier today as results suggested Italy’s election would result in a hung parliament, possibly leading to another vote.
“Anything to do with the South African mining industry” can affect prices, Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said today by phone.
“The market is a bit nervous. Because the platinum market is so overstretched, it doesn’t take much for people to start selling.”
Platinum for immediate delivery slid as much as 1.6 percent to $1,580.45 an ounce, the lowest since January 9, and was at $1,593.30 by 11:28 a.m. in London.
A sixth day of losses would be the longest slump since December.
Futures for delivery in April dropped 1.6 percent to $1,594.30 on the New York Mercantile Exchange.
Futures trading volume was more than double the average in the past 100 days for this time of day.
The metal jumped as much as 13 percent this year as Anglo American Platinum, the biggest producer, said it plans to cut output.
An ounce of platinum bought as little as 0.9945 of an ounce of gold, the least since January 22, data compiled by Bloomberg show.
Gold Price
Gold for immediate delivery lost 0.1 percent to $1,591.67 an ounce in London, after reaching $1,602.60 today, the highest since February 20.
The metal traded above platinum for the first time this month earlier today.
“Physical demand is extremely good,” Bernard Sin, head of currency and metal trading at bullion refiner MKS (Switzerland) SA in Geneva, said today by phone.
“Anything below $1,600 an ounce is reasonably cheap.”
Bullion is still down 5 percent this year as some Federal Reserve policy makers advocated more flexibility in stimulus.
Holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, fell 7.8 metric tons to a six-month low of 1,272.9 tons yesterday, data on its website show.
Gold’s price cycle has probably turned as the recovery in the US economy gathers momentum and investment holdings collapse, Goldman Sachs Group Inc. said in a report yesterday.
The bank cut its three-month target to $1,615 from $1,825 and lowered the 12-month forecast to $1,550 from $1,800.
Silver lost 0.5 percent to $28.865 an ounce in London.
Palladium was down 0.6 percent at $731.93 an ounce. - Bloomberg News