Gold rebounded on Monday after oil jumped on supply worries, while platinum fell to its lowest level in more than six months on poor car sales, which will potentially slash demand for autocatalysts. The most active contract on Tokyo platinum futures tumbled by the daily limit to its weakest since late January as speculators ditched their contracts.
Cash palladium, which normally tracks sister metal platinum, held near a 7-month low. Gold edged up to $913.60/914.70 an ounce from $909.85/911.45 late in New York on Friday - well below a four-month high of $987.75 in mid-July.
"Until there's some really bad news out of the US, I think gold could be slightly weighed the on dollar's rise," said Adrian Koh, an analyst at Philip Futures in Singapore. "There's still no sign that it's out of the near-term downtrend and we are still very near to the $890-$895 supports."
Oil rose 81 cents to $125.91 a barrel after the United States said Iran had left the UN Security Council no choice but to increase sanctions on the Islamic Republic for ignoring demands that it halt sensitive nuclear activities.
In theory, high oil prices elevate gold's appeal as a hedge against inflation. The physical sector saw light buying from Indonesia but other consumers such as Vietnam and Thailand waited for a correction. Premiums for gold bars were unchanged at 60 US cents an ounce to spot London prices in Singapore.
Spot platinum fell as low as $1,612.50 an ounce, its lowest level since January 25, from $1,646.50/1,666.50 an ounce late in New York, on fears over the health of carmakers, which consume around half of the world's platinum each year. US auto sales hit a 16-year low in July, led by a 27 percent drop at General Motors Corp, as high gas prices and tight credit sent the industry into a tailspin.
"Platinum looks really bad now," said Koh of Philip Futures. "It is below the previous $1,684 support and likely to head towards $1,574.50. It's below all supports and I think it's in freefall mode."
Shares of Japanese automakers Honda Motor and Toyota Motor fell on Monday after weak US auto industry sales. Despite lower prices, there were no signs of buying interest yet from jewellery and automakers, said dealers. "The bear trend continues. The target price is $1,500," said Kazuhiko Saito of Interes Capital Management in Tokyo, referring to a level last seen in January. "We may see the price below $1,500 this week," he said.
Platinum is well below a record high of $2,290 hit in early March, when a power shortage in main producer South Africa disrupted mining and triggered supply worries. The most active Tokyo platinum contract for June 2009 delivery on the Tokyo Commodity Exchange fell by the 300 yen limit to 5,567 yen per gram before bouncing. New York gold futures added $3.8 to $921.30 an ounce. Spot palladium rose to $366.00/374.00 an ounce from $364.00/372.00 late in New York. Silver edged up to $17.55/17.60 an ounce from $17.47/17.55 late in New York.