* Platinum dips for seventh session out of eight
* Traders fear Volkswagen scandal could hit auto demand
* Gold extends losses to third day (Updates prices, adds comment)
By Jan Harvey
LONDON, Sept 29 (Reuters) - Platinum prices fell below $900 an ounce on Tuesday for the first time since January 2009, hurt by fears that the Volkswagen emissions scandal would cut demand from carmakers and perceptions that the market remains oversupplied.
The metal has been hit by last week’s revelations that Volkswagen AG falsified U.S. vehicle emission tests, which some believe could affect demand for diesel cars. Platinum is widely used in autocatalysts, particularly for diesel engines.
Spot platinum was down 0.9 percent at $907.75 an ounce by 1340 GMT, having earlier touched a low of $894. The metal is on track for its biggest monthly loss since May 2012 in September, and its steepest quarterly plunge in seven years.
“Platinum is probably oversold, but the market I don’t think believes that,” Natixis analyst Bernard Dahdah said. “Traders are very pessimistic on platinum — they think there is a fundamental shift in the industry, where demand for platinum for automobiles will drop because of lower diesel sales.”
Even before the Volkswagen scandal broke last week, the market had been suffering from an increase in supplies following the end of last year’s five-month strike among platinum miners in major producer South Africa, and a weakness in Chinese jewellery demand.
“We... have a supply side that doesn’t seem to be adjusting to the lower price environment,” Citi analyst David Wilson said. “In South Africa it is very difficult to cut production.”
Platinum’s discount to gold reached its widest since August 2012 at $224 an ounce. Spot gold was up 0.1 percent at $1,133.36 an ounce, while U.S. gold futures for December delivery were up $1.30 an ounce at $1,133.00.
Gold has come under pressure from uncertainty over when exactly the Federal Reserve will raise U.S. interest rates for the first time in nearly a decade. Conflicting views by policymakers, several of whom are scheduled to speak this week, have stirred more uncertainty.
William Dudley, head of the New York Fed, and John Williams, head of the San Francisco Fed, both signalled support for a rate hike this year. But Charles Evans, head of the Chicago Fed, called for rates to stay near zero until mid-2016.
“Fed policy has been instrumental in influencing gold prices for many months,” HSBC said in a note. “The bullion market consequently continues to look for any indicators of Fed policy shifts.”
Silver was up 0.3 percent at $14.62 an ounce, while palladium was up 0.8 percent at $649.22 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Mark Heinrich)