Platinum has surged 28 percent in 2007 as a slumping dollar drove demand from traders seeking alternative investments. The price increase may discourage buyers who use the metal to make jewelry and car parts, said Ron Goodis, futures trading director at Equidex Brokerage Group Inc. in Closter, New Jersey.
``Physical demand is starting to slow at these price levels,'' Goodis said. ``Nobody is immune to the fundamentals of supply and demand. As the price trends higher, the demand does start to dip.''
Platinum futures for January delivery fell $3.60, or 0.3 percent, to $1,465.50 an ounce on the New York Mercantile Exchange. Earlier, the metal reached a record $1,474.90.
For every $100 increase in the platinum price, jewelry demand has dropped by 200,000 ounces, according to Lonmin Plc, the world's third-largest producer of the metal. Jewelers account for 24 percent of global demand, according to London- based metals trader Johnson Matthey Plc.
The metal also is used to make pollution-control devices in autos.
Palladium futures for December delivery dropped 55 cents, or 0.2 percent, to $375.20 an ounce. The metal has still gained 11 percent this year.
Source: bloomberg
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