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Platinum ETF Slips on Diesel Cars Outlook

This article was originally published on ETFTrends.com.

The platinum exchange traded fund is retreating after European countries crack down on pollutants.

The ETFS Physical Platinum Shares (PPLT) fell 2.6% Thursday as the platinum spot price dipped 2.8% to $956.2 per ounce.

German courts ruled that cities in Europe's largest economy and world's fourth largest automaker are allowed to ban diesel cars, Mining reports.

“We’re witnessing the creeping death of diesel,” Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences, told Bloomberg News. The technology will still survive in some segments like trucks, but “if you’re a private car buyer, it’s very hard to pick diesel. The insecurity is growing.”

The ruling affects more than 10 million vehicle owners in Germany and could have ripple effects across Europe.

“This is a groundbreaking ruling, and one which we expect has set a strong precedent for similar action across Europe,” Arndt Ellinghorst, an auto-industry analyst with Evercore ISI, said in a note to clients. The ruling is “damaging to already-battered diesel sentiment.”

For instance, on the heels of Germany's decision, Rome mayor Virginia Raggi announced “Rome has decided to ban the use of diesel cars from its historical center from 2024” at the Women4Climate conference in Mexico City, Electrek reports.

The decision to ban diesel cars is attributed to cutting down o pollutants. Diesel engines, even “clean” diesel, emit an exceptionally high amount of particulate emissions compared to other motors.

Car manufacturers in Europe where diesel makes up around 50% of the market are the biggest industrial consumers of platinum - autocatalysts represent more than 40% of platinum demand.

Meanwhile, gasoline engine cars makes up for 70% of overall palladium demand.

The ETFS Physical Palladium Shares (PALL) declined 6.3% Thursday as the palladium spot price fell 6.2% to $978.2 per ounce.

Precious metals were were also pulling back and extended losses after comments from Federal Reserve Chairman Jerome Powell this week added to speculation for further interest rate hikes and propped up the U.S. dollar to a near six-week peak. A tighter monetary policy typically weighs on physical assets, notably precious metals, as it raises the opportunity cost of holding on to non-yielding assets while strengthening the greenback, in which the metals are priced.

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