Platinum, Palladium Futures Gain as Dollar Drops Against Euro

By Halia Pavliva

Oct. 28 (Bloomberg) -- Platinum futures gained for the first time in six sessions as the dollar fell against the euro, increasing the investment appeal of the precious metal. Palladium also rose.

The euro climbed as much as 0.8 percent against the dollar. Platinum and palladium, used in jewelry and pollution-control devices in cars, had tumbled in tandem with other commodities this month as the global economic slump reduced demand for raw materials.

``Precious metals remain fully dominated by the dollar,'' Sergey Grudev, an analyst at Standard Bank Russia, said in a report. ``The dollar fell, helping to renew investments. The market dynamics suggest that the dollar may fall further.''

Platinum futures for January delivery rose $17.80, or 2.2 percent, to $815 an ounce at 10:32 a.m. on the New York Mercantile Exchange. Before today, the price dropped 23 percent this month. The metal surged to a record $2,308.80 in March.

Palladium futures for December delivery rose $7.10, or 4.1 percent, to $182.50 an ounce. Before today, the price fell 14 percent this month.

The metals also gained on speculation the U.S. may rescue carmakers. General Motors Corp. Chief Executive Officer Rick Wagoner is personally leading a lobbying push for federal aid as the biggest U.S. automaker seeks to merge with Chrysler LLC, people close to the discussions said.

`Positive Factor'

``The possible bailout of the U.S. auto manufacturers may be looked on as a positive factor for catalyst demand,'' Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in a report. ``With the insecurity, it may look like these metals have a firmer bottom than rival markets such as stocks and real estate.''

The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 1.8 percent today after climbing 0.9 percent yesterday.

``Risk appetite'' may return for commodities, John Reade, the head of metals strategy at UBS AG in London, said in a report. ``Deleveraging, disinvestment, fundamentally weak demand and the dollar are the major factors in the recent commodity sell-off,'' combined with bets on further declines, he said.

Before today, platinum tumbled 48 percent this year, and palladium was down 54 percent.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: October 28, 2008 10:37 EDT