Futures Markets: Recent Rally in Platinum, Gold Prices Jumps the Tracks Amid Profit-Taking
The precious metals rally derailed as platinum and gold prices plummeted amid heavy profit-taking.</br></br>Platinum prices for immediate delivery, which had risen 31% in the past month alone, plunged $29.50, to $646.70 an ounce on the New York Mercantile Exchange. It was the sharpest daily decline on the platinum market in 3 1/2 years, exchange officials said. The active October contract fell $25 an ounce, to $652.70. Gold prices followed suit, with the October contract at the Commodity Exchange in New York tumbling $11.80, to $412.50 an ounce.</br></br>Traders and analysts attributed some of the sell-off to a stronger U.S. dollar and weaker oil prices, which tend to keep a lid on inflation. Many traders hold precious metals, especially gold, as an inflation hedge. A weaker dollar and early whiffs of inflation have been cited among other factors in precious metals' recent rise.</br></br>But despite the economic factors, many analysts said a correction was simply due. "You don't have to be a rocket scientist to figure out that platinum is vulnerable" at these levels, said Gail Levey, platinum analyst for Shearson Lehman Brothers Inc., New York.</br></br>William O'Neill, research director at Elders Futures Inc., New York, added that the sharp decline indicates that the precious metals rally could soon fizzle. "Prices could turn the other way, and before you know it there could be a major sell-off," Mr. O'Neill said.