Themes: Platinum, Gold, Metal Markets
Last month, we talked about platinum’s ‘rally’ as a spillover of gold’s safe haven status. The metal's prices have shown a recent uptick, heading higher after investors bought in at the $1100/oz level early last month.
We’re seeing an interesting story unfold here. Let’s dive straight in to the chart below which tracks platinum’s spot prices (red line) over the past six months. You can see the metal attempting a rise above resistance set at the 60-day moving average of $1168/oz.
Now, instead of steadily gaining after the 13 April high (circled), prices only pushed up to $1291/oz on 4 June. Then, they tanked again to fall below the 1100/oz mark.
Platinum has rebounded on buyer interest at a key level
Source: Kitco
The key factor behind platinum’s recent price surge is that the metal found buyers at the $1100/oz level. From here, it could head higher again, provided key support at its 28 April low holds up.
But don’t forget that platinum’s fundamentals remain weak - 60% of its demand comes from the auto industry since it is used in catalytic converters. But the recession has hugely impacted the auto sector which is still struggling for air.
The $1300/oz remains a near-term target price for the bulls. We don’t believe that this is achievable over the next month or two. A weak economy aside, summer is typically the season for low industrial demand, making it unlikely that platinum will break through that all-important mark.
Recommended article: For another insightful article by Shivvy Arora, this time looking at the AIM market, please click here
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