Palladium and platinum plummet after Germany moves to ban certain types of trading

Palladium, platinum lead retreat in metals

NEW YORK — Palladium and platinum prices fell sharply Wednesday as traders pulled out of the highly volatile contracts to raise cash as new trading curbs went into effect in Europe.

Palladium tumbled 9 percent and platinum 5 percent after Germany introduced strict restrictions on certain kinds of bearish bets on European debt and stocks. Investors who had to exit those positions felt they could raise the money to cover those positions by selling palladium and platinum contracts.

So while the trading restrictions don’t specifically curb trading in commodities themselves, they did negatively affect the market Wednesday.

Palladium for June delivery sank $47.30, or 9.3 percent, to settle at $459.70 an ounce. Platinum for July delivery tumbled $84.80, or 5 percent, to $1,605.70 an ounce.

William Rhind, strategic director for ETF Securities, said the sell-off is likely to be short-lived because the fundamentals behind the precious metals haven’t changed. It was merely the need to quickly raise cash that sent prices tumbling, he said.

Gold and silver also fell because of the restrictions, but the movements weren’t as pronounced. Those metals tend to be more stable than palladium and platinum. There is a deeper market for gold and silver, so higher volume can cut down on volatility.

June gold fell $21.50 to settle at $1,193.10 an ounce, while silver for July delivery fell 76.4 cents, or 4 percent, to $18.115 an ounce.

Palladium and platinum had been volatile in recent weeks as some investors bought them because they consider them safer alternatives to currencies like the euro, which has been plummeting.

However, the pair are also closely associated with manufacturing. So fears of an economic slowdown in Europe that have dragged down the euro have also, on occasion, hurt palladium and platinum.

Any slowdown in the global economy would cut into demand for industrial metals, which is one of the main reasons copper has faltered recently.

Copper prices have also been hurt by declining imports by China, said Mike Frawley, global head of metals at Newedge. China, the world’s largest importer of copper, has ample reserves right now and has been able to cut back its purchases, Frawley said.

July copper fell 7.15 cents, or 2.4 percent, to settle at $2.9595 a pound. It fell below $3 a pound earlier this week for the first time since February.

Energy prices dropped because of worries that a global economic slowdown would curtail demand, but oil bounced back late in the day.

Benchmark crude for June delivery rose 46 cents to settle at $69.87 a barrel during a volatile day on the New York Mercantile Exchange. Earlier, prices dropped as low as $67.90, the lowest level since Sept. 30.

With the June contract set to expire Thursday, much of the trading has moved to the July contract. The July contract fell 22 cents to settle at $72.48 a barrel.

The difference in price between the two contracts has led oil companies to hold and sell supplies next month. That has helped reserves swell.

In other Nymex trading in June contracts, heating oil fell 1.63 cents to settle at $1.9452 a gallon, and gasoline futures dropped 2.79 cents to settle at $2.0152 a gallon. Natural gas tumbled 18.4 cents to settle at $4.158 per 1,000 cubic feet.

Elsewhere, grains and beans prices were mixed. Wheat for July delivery rose 1.5 cent to settle at $4.6925 a bushel, while corn fell half a cent to $3.5925 a bushel. Soybeans fell 1 cent to $9.385 a bushel.