| Platinum fell to an 18-month low and palladium plunged to the lowest in almost three years on concerns a weakening economy will cut demand for the metals used by manufacturers of cars and jewelry.
The U.S. economy, the world's largest, is forecast to slow to a 1.2 percent annual expansion rate this quarter from 3.3 percent in April through June. Auto sales in the U.S., the biggest market, are headed to a 15-year low following eight months of job cuts, wage increases that have trailed inflation, falling property values and restricted access to credit.
''As long as the economy remains weak, demand for platinum will remain weak,'' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. ''You could see some support at $1,180 an ounce to $1,200 an ounce, but I am a little skeptical it can hold there.''
Platinum futures for October delivery fell $70.10, or 5.6 percent, to $1,192 an ounce on the New York Mercantile Exchange. The price earlier touched $1,179.20, the lowest since March 6, 2007. Most-active futures have dropped 20 percent this month and are down 48 percent from a record $2,308.80 in March.
''People lick their wounds, and continue lower,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said today in a note to clients.
Palladium futures for December delivery fell $14.55, or 6 percent, to $228.45 an ounce, after reaching $224.30, the lowest since Nov. 7, 2005. The most-active contract tumbled 11 percent last week and is down 40 percent this year.
Bearish Surprise
''The market has surprised me, as platinum broke through the significant $1,250-an-ounce support,'' Perez-Santalla said. ''I have been a bear for the most part, but we are at levels in the precious metals that I did not expect to see unless crude dropped below $100 a barrel.''
Some investors buy metals, including platinum and palladium, to preserve value when the dollar falls, oil gains and inflation accelerates.
Crude oil has fallen about 30 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduced demand for fuels. It was still trading above $102 a barrel in New York today.
The dollar rose to an 11-month high against the euro as crude oil fell and equities gained on Lehman Brothers Holdings Inc.'s plan to sell assets. The dollar reached $1.4012, the strongest since Sept. 20, 2007.
Personal spending, the biggest part of the U.S. economy, will stall from July to September, three months earlier than predicted last month, according to the median estimate of 49 economists surveyed by Bloomberg News from Sept. 2 to Sept. 9.
Platinum may fall to $1,000 an ounce and palladium may touch $200 an ounce in the next two to three weeks, Ralph Preston, an analyst at Heritage West Futures Inc. in San Diego, said yesterday.
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