Platinum prices fell in European trade on Thursday, extending losses for the 4th straight session and plunging to a two-week low as demand for non-yielding assets fell following the release of the Federal Reserve’s meeting minutes.
Growing concerns are being raise about the metal’s weak real demand, particularly in China where industrial activity is slowing down.
Following a 1.2% loss on Wednesday, platinum prices dropped 0.9% to $966 an ounce, the lowest level since December 22. Most metals denominated in dollars also saw losses.
On December 28, platinum reached a six-month high of $1,015 per ounce before going through a protracted correction and profit-taking.
December saw a 6.9% increase in platinum prices, the second monthly gain in three months due to expectations that international central banks would lower interest rates in 2024.
As the Chinese economy slows down, platinum fell 7.5% last year, marking the second annual loss in the previous three years.
Only the automobile industry accounts for 41% of the world’s demand for platinum. However, due to rising prices and declining demand, the industry has recently slowed down.
Federal Reserve Minutes and Interest Rate Outlook: Effects on Platinum Prices
The minutes of the Federal Reserve’s meeting on December 13th revealed that policymakers think interest rates should stay high for a while.
By year’s end, members think that interest rate reductions would be more appropriate.
The likelihood of several early the United States interest rate cuts this year was harmed by the minutes. Which demonstrated a blatantly cautious position on inflation and interest rates.
The odds of the first the United States interest rate reduce at the Federal Reserve’s March meeting dropped to 73% after the minutes were released.
Even though the government is implementing more financial and monetary stimulus measures. Which may pay off in the second half of the year, China’s economy is still suffering from weaker industrial activities.