Tokyo platinum futures tumbled to a one-month low on Tuesday as hedge funds actively unwound their positions due to lingering wariness that the yen could advance further in the near term, traders said.
Yen-denominated gold futures maintained their safe-haven status amid uncertainty over the Middle East situation and global security concerns, with some investors detected shifting into gold from recently fragile platinum.
"Market players are actively slashing their longs in platinum due to strong fears of the yen's further appreciation," said Koji Suzuki, a manager at Star Futures Securities.
"The market is now looking to take the (prompt April) contract below 2,900 yen, which could depress the overall mood even more."
Suzuki said a decisive break below that level would pave the way for the April platinum contract on the Tokyo Commodity Exchange to dip to closely watch technical support of 2,800 yen.
The April contract hit a daily 80-yen limit low of 3,017 yen per gram before ending the day down 77 yen at 3,020 yen.
June and October contracts also plunged by their daily 80-yen limit. It was the second time since on Thursday that several contracts fell by their limits.
The benchmark February contract fell as low as 2,871 yen the lowest level since February 26. February futures closed at 2,887 yen, down 63 yen from Monday's settlement.
Traders said the yen's renewed uptrend has been depressing sentiment for platinum, with hedge funds eagerly seeking sell factors.
The market reacted little to Japanese industrial output figures, which signalled an improving outlook for the nation's economy. Industrial production fell 3.7 percent in February from a month, slightly more than a median forecast of a 3.4 percent decline in a Reuters survey of 25 economists last week.
But the government forecast manufacturers' output a key component and close proxy of industrial production would rise 0.5 percent in March and 4.2 percent in April. Precious metals participants are more sensitive to the movements in the currency market. The dollar was quoted at 105.67/69 yen, not far from its low of 105.16 yen hit last month.
On Monday it dipped as low as 105.26. Investors in the platinum market were not convinced by Finance Minister Sadakazu Tanigaki's comments that Japan's currency policy had not changed and that it would intervene if market rates strayed from fundamentals.
"Platinum should come under stronger selling pressure should the dollar dive below the psychologically important 105 yen level," Star Securities' Suzuki said. Losses on the TOCOM gold contract were limited as the dollar-denominated spot price strong. The key gold futures closed up two yen at 1,426 yen per gram.
Other contracts closed unchanged to down four-yen. Spot bullion was quoted at $418.75/419.50 an ounce against $416.50/$417.25 in New York.
Below are closing prices for TOCOM's most active precious metals contracts, with the day's turnover for each metal.