The price of platinum fell to a 2012 low of $1,382.15 a troy ounce amid fears of stalling global demand from the automotive industry for the catalytic metal, particularly in Europe. The metal, which was trading above $1,900 an ounce last summer and a peak of $2,290 in 2008, had rebounded to $1,480 an ounce on Thursday.

The mine closure by Aquarium comes within weeks of fellow South African miner Eastern Platinum’s suspension of investment in its Mareesburg platinum mine, which had been scheduled to begin production next year. Analysts are now waiting to see what the reaction of Anglo Platinum, the industry leader, would be to the prolonged downturn in the market.

The rally in platinum over the past few weeks meant that it had outperformed its fellow precious metal gold, for the first time in months.

Tom Kendall, precious metals strategist at Credit Suisse, noted there had been buying by consumers as well as speculative trading based on the ratio between platinum and gold – a favourite of hedge funds.

“The price action suggests that it’s a combination of people playing that ratio and buying platinum outright,” he said, but added that investors’ covering bearish positions was the main source of buying behind the current rally.

While some platinum investors are expected to focus on car sales and the impact on catalytic converters, for which the precious metal is used, positive sentiment triggered by supply cuts may be overshadowed by macroeconomic events, with the Greek elections this weekend and the FOMC monthly meeting next week.

Platinum prices may look to the gold market, especially with expectations for US quantitative easing returning again among investors. The yellow metal – which was trading at $1,619.85 a troy ounce on Thursday – was “feeling a bit more bullish” said Mr Kendall, adding: “People in the market are generally becoming more certain that there will be some kind of easing action.”

Source: http://www.ft.com/intl/cms/s/0/af8f312e-b63b-11e1-a14a-00144feabdc0.html#axzz1xsTRcsR4