Platinum plummets to below US$900 on VW scandal

Singapore - Platinum fell below US$900 an ounce yesterday for the first time since January 2009 on fears that the Volkswagen emissions scandal would reduce demand from the auto sector. Spot platinum slid to US$899.80 an ounce, before paring some losses to trade at US$902.99 in late morning trade. The metal, which has fallen for seven sessions out of eight, has been hurt by news of Volkswagen's falsification of US vehicle emission tests as investors believe it could affect demand for diesel cars. Platinum is widely used as a component in emissions-cleaning catalytic converters for diesel cars. "We tend to think that platinum prices have been oversold in the face of the emissions concerns and worries about diesel vehicle sales going forward," said HSBC analyst James Steel. "It strikes us that not enough attention is being given to the likelihood that tighter emissions legislation and increased vigilance by the auto makers will increase platinum demand," he said. Upcoming European legislation on CO2 emissions will make it harder for the authorities to back a war on diesel, analysts have said. Meanwhile, palladium has gained as investors believe demand for gasoline cars could increase in the wake of the Volkswagen scandal. Last week, the metal hit its highest since mid-July. Spot gold fell 0.4% to US$1 127.16 an ounce, extending losses to a third session on worries that US rates could increase this year. A drop in Asian shares to three-and-a-half-year lows failed to trigger any safe-haven bids for bullion. A flurry of planned appearances this week by Federal Reserve officials began on Monday, but conflicting views by policymakers only created more uncertainty. - Nampa/Reuters