Wednesday, September 10, 2014

Platinum Volatility Near Lowest Since 2005 in New York

By Debarati Roy

Platinum volatility slumped to the lowest in nine years amid fading investor interest in the metal used in pollution-control devices for cars

The 60-day historical volatility was near 11 today, after dropping to 10.94 on Sept. 5, the lowest since June 2005, according to data compiled by Bloomberg. Open interest in New York futures and options has declined in seven of the past eight weeks, while holdings in global exchange-traded products are at the lowest since late May.

Prices have retreated 5.8 percent since the end of June, on pace for the biggest quarterly loss in more than a year, amid signs of slowing economic growth in Europe. The region accounts for 25 percent of global demand. The European Central Bank last week unexpectedly cut interest rates and announced a bond-buying program in a bid to revive expansion.

“The interest is diminishing as people are worried about Europe,” Bart Melek, the head of commodity strategy at TD Securities in Toronto, said in a telephone interview. “We expect prices to remain weak unless the stimulus program announced by the ECB is able to boost growth.”

Platinum futures for October delivery fell 1 percent to settle at $1,397.50 an ounce at 1:15 p.m. on the New York Mercantile Exchange, after touching $1,396.80, the lowest for a most-active contract since April 24.

Prices had climbed 7.9 percent in the first half of the year as a five-month strike disrupted mine production in South Africa, the world’s biggest producer. The stoppage ended in late June, and the metal retreated 3.9 percent over the next two months.

Open interest in the Nymex market has slumped 12 percent to 70,683 futures and options since reaching a 16-month high in July. Money managers lowered their bets on a price gain by 34 percent last month, the most since April 2012, Commodity Futures Trading Commission data show.

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