Tokyo platinum futures rebounded sharply on Wednesday on massive bargain-hunting backed by healthy fundamentals after plunging more than five percent since hitting a 16-year high the day before, traders said.
Platinum was supported by lingering views that brighter signs in the global economy would increase demand for the white precious metal, while wariness about supply shortages also provided support.
The key February platinum futures contract dropped sharply to a session low of 2,875 yen per gram in the on follow-through selling reflecting the dollar's recovery.
But platinum-reversed course after meeting plenty of bargain-hunting demand near the low, which boosted the key, contracts in late afternoon.
The contract closed up 51 yen at 2,966 yen compared with Tuesday's close of 2,915.
Other contracts rose 25 to 49 yen. "Platinum started out pretty weak, but the market confirmed massive bargain-hunting and short-covering bids around the low.
This proves that many players are still very bullish," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management.
"The underlying trend is strong but the market would have to have fresh, solid buying incentives to push the key contract through the high above 3,000 yen hit yesterday," Kageyama said.
Benchmark platinum futures rose as high as 3,024 yen the highest since August 14, 1987 on Tuesday.
Market bulls had been concerned about the recent uptrend of the greenback, which has put pressure on dollar-denominated precious metals prices.
The dollar has reclaimed more than six percent from last month's record lows against the euro and five percent from 3-1/2 year troughs versus the yen, leading some analysts to declare that the currency's two-year downtrend may be over.
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