Late last week, platinum prices hit their lowest mark since January, trading at $1,622 an ounce. This comes as a surprise after the first half of the year, when platinum gained 25.6 percent, mirroring similar gains in palladium, which increased 82.3 percent, and rhodium, which increased 42 percent. After those six months, however, remarkable lows took hold on platinum group metals. Declines in the auto sector hit hard, since the auto sector consumes more palladium than any other industry. Likewise, a troubled global economic outlook faces the market at a time when precious metal supplies increase.
Photo Credit: Wall Street Journal.
According to the Wall Street Journal, “October platinum settled $110.80, or 6.3 [percent], lower at $1,651.10 per troy ounce on the New York Mercantile Exchange, while September palladium lost $12.50, or 3.3 [percent], to $371.”
Car sales in the United States dropped to a 16-year low last month, and high gas prices and job insecurities make immediate growth impossible. “GM lost $15.5 billion in the second quarter because of sinking vehicle sales,” the Wall Street Journal explained. “Ford Motor Co. and other auto makers reported softer car sales for July. German auto maker BMW AG cut its outlook.”
Although plummeting platinum prices could lead mines to lose money, several analysts have an optimistic outlook, assuming that platinum’s supply and demand deficit of 2007 could continue this year.