Platinum fell more than 2 percent in early trade on Tuesday as fears of a supply shortage suddenly faded on signs that weeks of labour unrest in South Africa's mining sector could end soon. After trading mostly higher early in the session, the metal plummeted over $50, or 3 percent, within 10 minutes in response to news Lonmin's Marikana platinum miners had accepted a pay offer and would return to work on Thursday.
The metal, mostly consumed as an autocatalyst, was on track to post its largest two-day decline since March, as No 1 producer Anglo American Platinum also said it had resumed operations in the strike-hit Rustenburg area. The fast-moving and somewhat unexpected news from South Africa, which holds more than 80 percent of the world's platinum reserves, pushed gold and silver off their highs and left them up slightly on the day.
"It takes out the premium because of a shortage caused by an immediate strike," said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC. Prior to the decline that started on Monday, platinum had rallied about 24 percent after a deadly August clash between Lonmin miners and police at the Marikana mine stoked supply worries.
Spot platinum dropped 2.4 percent to $1,621.40 an ounce on Tuesday, having lost 4.6 percent in the past two days. Palladium was down 1.3 percent at $664.50 an ounce. Gold edged up, having dropped in the previous session due to plummeting crude oil futures. Bullion was still hovering around $10 below a six-month high.
Spot gold rose 0.1 percent to $1,763.38 an ounce, while US COMEX gold futures for December delivery lost $5 at $1,765.60 an ounce. Caution over how far the US Federal Reserve's third round of bond buying, known as quantitative easing, would prove effective kept a lid on gains.
Chicago Fed President Charles Evans said the US central bank will likely move to keep monthly bond buys at its current $85 billion pace into the new year, even after a program accounting for about half of that expires at the end of 2012. Silver rose 0.5 percent to $34.35 an ounce.