London: In the beaten up world of commodities, platinum may prove to be a good bet.

“Right now, platinum looks like an oversold metal,” Ivan Szpakowski, a commodities strategist at Citigroup Inc., told Rishaad Salamat in a Bloomberg TV interview on Tuesday when asked what’s hit rock bottom and may rebound.

The metal that’s used in jewellery and catalytic converters sank to the lowest level in seven years on Tuesday after retreating for the past five quarters. It’s lost 30 per cent this year as the dollar advanced and the Volkswagen AG emissions scandal hurt prospects for demand. Platinum is now so cheap that it may start to be used to cleanse gasoline-powered engines, extending its reach from the usual use in diesel-powered cars, according to Szpakowski.

“It’s been really beaten up, not only on the US dollar strength and the Fed hike, but also on the reaction to this Volkswagen saga, in fears of the diesel car market is really going to collapse,” he said. “We don’t think that’s something that’s going to happen imminently.”

Sinking Prices

Platinum for immediate delivery traded 0.2 per cent lower at $844.01 an ounce at 3:20pm in Singapore after dropping to $835.96 on Tuesday, the lowest since December 2008. The run of five quarterly losses completed in September was the longest since 1991. Spot palladium, used in gasoline-vehicle engines, also dropped this year, slumping to the lowest since 2010.

“There is a substitution effect that can take place,” said Szpakowski. As the metal gets cheaper “you can actually start seeing platinum being used in the gasoline-car market and platinum cannibalising that. And so you have a certain amount of demand support there,” he said.

The premium paid for platinum over palladium sank to a 13- year low after the scandal broke. An ounce of platinum costs now about 1.56 ounces of palladium, down from 1.84 ounces near the end of August, data compiled by Bloomberg show.

The dollar has surged in 2015 on prospects for the first increase in US interest rates in almost a decade. Volkswagen said some of its diesel cars had used deceptive software to duck emissions requirements, forcing it to plan to recall millions of vehicles.