| Platinum futures gained on speculation industrial users are buying the metal after the price fell 40 percent from a March record. Palladium also rose.
Platinum dropped 8.7 percent this year before today, and palladium was down 24 percent, partly on concerns that demand may decline as U.S. auto sales fell 16 percent last month from a year earlier. The metals are used in emission-control parts for engines and in making jewelry. Before today, platinum tumbled 40 percent from a record $2,308.80 an ounce on March 4.
''Industrial users are buying the metal at these prices,'' said Ralph Preston, an analyst at Heritage West Futures Inc. in San Diego. ''It's bargain hunting.''
Platinum futures for October delivery rose $10, or 0.7 percent, to $1,402.20 an ounce on the New York Mercantile Exchange. The price sank 6.6 percent in the past two sessions.
''Bears are running into a wall of technical support at $1,305 an ounce, halting any further slides. The downtrend is running out of steam,'' Preston said. ''Technically, this market fell too far, too fast.''
''In my opinion, we are a headline away from platinum coming back into vogue as a hedge against inflation,'' he said.
Palladium futures for December delivery increased $1.40, or 0.5 percent, to $289.80 an ounce. The metal fell 6 percent in the previous two sessions.
''We remain cautious about the advance, and would rather be selling into rallies as opposed to buying the dips,'' Edward Meir, an analyst at MF Global Ltd. in Stamford, Connecticut, said today in a report.
Demand Concerns
''The moves lower in platinum-group metals have had some fundamental justification in the weakness in car demand,'' John Reade, the head of metals strategy at UBS AG in London, said today in a report. ''We continue to forecast gold and the other precious metals will trade higher on a one- and three-month view, but we recognize that strong performance will need support from a weaker U.S. dollar.''
The three biggest U.S. automakers reported a 10th straight monthly sales decline yesterday, a sign of weakening demand for catalytic converters used in exhaust systems. Platinum consumption by automakers accounts for more than 60 percent of global platinum demand, according to Johnson Matthey Plc, which makes about a third of the world's auto catalysts.
The August annual selling rate for vehicles in the U.S. was 13.7 million, according to Autodata Corp. in Woodcliff Lake, New Jersey. That's the lowest figure for August since 1993.
The euro fell to the lowest level against the dollar this year after European Central Bank President Jean-Claude Trichet said the region is undergoing an ''episode of weak activity.'' A stronger dollar impedes precious-metals price gains, said analysts including Reade.
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