Tokyo platinum futures slipped on Tuesday as the dollar's fall against the yen triggered heavy profit-taking, hammering down the metal's price from a 16-1/2 year high hit the previous day.
But platinum found solid support due to strong short-covering needs in prompt futures contracts. The movement of the dollar/yen rate has been setting the trend for yen-based platinum prices in recent sessions.
"Having seen the dollar fall about one yen overnight, traders actively locked in profits after seeing key prices shooting up to fresh (16-1/2 year) highs yesterday," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management.
The dollar was quoted at 111.23/28 yen, down about a yen from Monday.
"This was a good chance for profit-taking after the rally, but we've also seen strong short-covering needs in prompt contracts," Kageyama said.
Key February platinum futures on the Tokyo Commodity Exchange (TOCOM) closed down 23 yen per gram at 3,038 yen, but they were off a session low of 3,019 yen, with solid support seen at 3,000.
On Monday, the key contract closed at 3,061 yen the highest since August 1987. Other contracts fell 14 to 40 yen.
Traders said sentiment was bullish on platinum as there were plenty of short positions left the in the prompt April contract and three other prompt contracts.
TOCOM gold futures held near a two-month high as firmness in dollar-denominated spot bullion provided support.
"TOCOM gold managed to receive some support after seeing dollar-based gold being supported above $400 (per ounce)," Kanetsu's Kageyama said.
Solid bargain hunting in distant contract kept gold futures supported, traders said. The benchmark February gold futures contract ended up a slim one yen at 1,439 yen per gram. Bullion was at $402.00/$402.75 an ounce against $400.45/$405.15 last quoted in New York.
Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.