Sound fundamentals will limit the potential downside for platinum prices after the precious metal's value fell more than 10 percent in the last two weeks, dealers said on Tuesday.
Platinum, used in jewellery and automobile catalytic converters, hit a 24-year peak of $942 an ounce on April 13, sparking a round of profit taking by fund managers.
The metal touched a 12-week low at $819 an ounce on Monday but has bounced since.
"There could be more selling, but at some point the fundamentals will kick in. Physical support will be holding the market at $750 and $850 an ounce," said a dealer in Hong Kong.
"We've seen a very substantial liquidation in silver, palladium, platinum and to some extent in gold.
The truth is platinum has the best fundamentals," he said. Virtual Metals, a research group, said this month platinum supply will substantially fail to meet demand, unlike sister metal palladium, which faces chronic oversupply.
China's strong appetite for industrial metals is also seen supporting platinum prices.
After the drop to $819, spot platinum continued to rebound on Tuesday, trading in Asia at $839/$844, up from $820/$825 in New York late on Monday.
"We haven't seen any physical demand from China in the last seven days. When the price hovered at around $900, we heard that the Chinese were keen to buy at $850 to $860 level. But it didn't happen," said a dealer in Tokyo.
"I guess the Chinese believe there's still a possibility that the price will go lower," he said.
But dealers said the bounce from $819 would soon tempt buyers back to the market for fear that prices would continue to rise.
In addition, the dollar's failure to sustain its gains against the euro might also tempt buyers working from currencies other than the dollar.
A rising dollar makes platinum more expensive for holders of other currencies.