Platinum tumbles

Platinum fell seven percent on Wednesday as profit-taking continued after the metal spiked to a record high the previous day on talk of an exchange-traded fund.
One-month lease rates fell sharply between five to 15 percent in Europe from more than 100 percent the previous day as speculative buying tapered off. The rates hovered around five percent on Friday. Lease rates are the rates at which someone borrows a metal. The percentage tends to rise whenever there is a shortage in physical supply.
"The market seems to have corrected itself pretty rapidly and liquidity has come in to the marketplace," said Ross Norman, metals analyst at TheBullionDesk.com. "One thing is almost certain which is that we would see volatility remaining. Fundamentally platinum remains positive and my view is that prices are likely to remain pretty firm."
"But I suspect a good degree of profit taking ahead of the US holiday," he added. Platinum fell as low as $1,140 an ounce and was quoted at $1,145/1,160 by 1516 GMT, against $1,230/1,235 in New York late on Tuesday, when it jumped as high as $1,395.
"The limited liquidity metals such as zinc, lead, nickel and platinum are really at the mercy of speculators now," said Jon Bergtheil, global metals strategist at J.P. Morgan.
"Platinum still looks good. It's a metal we need rather than an optional metal."
Platinum gained more than 30 percent in a month on the ETF talk before retreating, but there has been no confirmation so far on the product. ETFs, often backed by a physical commodity, enable investors to trade securities on an exchange and give investors a return based on commodities prices, without trading futures or taking physical delivery.
Traders said options-related activity was also behind the price action. "There are rumours that a series of call options due to expire towards the end of the month could be exercised ahead of the expiry date which prompted the option sellers to buy physical metal thereby squeezing supply," John Meyer, metals analyst at Numis Securities, said in a report.
Strong platinum prices and growing sales of catalysts for cars boosted first-half sales at Britain's Johnson Matthey Plc, the world's largest platinum distributor, which reported an eight percent rise in first-half profit.
"Trading activity should slow down in the next few days due the Thanksgiving holiday in the US, but overall we expect volatility in the platinum market to remain at very high levels over the short term," Barclays Capital said in a daily report.
In other metals, a drop in the dollar against major currencies lifted gold to $632.60/633.60, against $627.90/628.90 in New York. Silver edged up to $13.13/13.20 an ounce from $13.04/13.11, but palladium fell to $322/327 an ounce from $326/331.