Precious Metals Hammered By Gas Announcement, Strong Dollar
Undated (AP) _ Precious metal futures prices dropped Thursday as news of a cleaner- burning gasoline stirred speculation of reduced platinum demand, and a stronger dollar undercut gold and and silver values.
On other commodity markets, grain and soybean futures were mostly lower; oil futures fell; and livestock and meat futures were mostly higher.
Platinum settled $5.50 to $5.80 lower on the New York Mercantile Exchange with the contract for delivery in July at $374 a troy ounce.
On New York’s Commodity Exchange, gold futures finished $2.30 to $2.60 lower with August at $368.90 a troy ounce; silver was 8.8 cents to 9.1 cents lower with July at $4.335 a troy ounce.
Platinum was hammered for the second straight day by ideas that a lower- polluting gasoline developed by Atlantic Richfield Co. will cut into demand for the metal, which is used in automobile catalytic converters.
Catalytic converters account for about 40 percent of platinum consumption.
Arco said the new fuel reduces pollutants by more than a third. But the Los Angeles-based company said it would not produce the fuel commercially unless California adopts pollution standards strict enough to require it. Even then, the company said it could not complete the necessary retooling of its Los Angeles refinery until 1996.
Analysts said the new fuel would have no immediate effect on platinum demand and may not have any effect in the future.
″Even in the worst-case scenario, there still will be some platinum used″ in catalytic converters, said Tom Griffo, metal analyst with Cargill Investor Services Inc.
″It’s a classic case of react first, let’s analyze it later,″ said Bernard Savaiko, senior metal analyst with PaineWebber Inc. ″When you start looking at it, there are an awful lot of flaws in the bearish argument.″
Platinum’s weakness pulled down gold and silver, analysts said. They said those markets also were affected by the strong dollar and perceptions that Middle Eastern countries may be forced to sell bullion to raise cash.
Grain and soybean futures settled mostly lower on the Chicago Board of Trade prompted by forecasts for more rain this week in the Midwest.
But analysts predicted a higher opening in the wheat market Friday in response to an Agriculture Department report released after the close that projected a smaller U.S. winter wheat harvest than traders expected.
The USDA said U.S. farmers will harvest 1.36 billion bushels of winter wheat compared with the June estimate of 1.45 billion. Last year’s winter wheat harvest totaled 2.03 billion bushels.
Wheat futures settled 1 1/2 cents to 4 1/4 cents lower with July at $2.61 a bushel; corn was 1/2 cent to 2 cents lower with July at $2.27 1/2 a bushel; oats were 1 cent to 1 3/4 cents higher with July at $1.20 a bushel; soybeans were 4 cents to 5 1/2 cents lower with July at $5.21 1/4 a bushel.
Crude oil futures settled 12 cents to 20 cents lower with August at $21.29 a barrel; heating oil was .18 cent to .35 cent lower with August at 58.20 cents a gallon; unleaded gasoline was .13 cent to .15 cent lower with August at 64.08 cents a gallon; natural gas was 0.6 cent lower to 2 cents higher with August at $1.157 per 1,000 cubic feet.
In livestock and meat trading on the Chicago Mercantile Exchange, live cattle were .35 cent to .85 cent higher with August at 73.60 cents a pound; feeder cattle were .40 cent to .90 cent higher with August at 90.07 cents a pound; hogs were unchanged to .95 cent higher with July at 55.70 cents a pound; frozen pork bellies were .62 cent lower to .57 cent higher with July at 44.20 cents a pound.