Sage Investment Club

Platinum, Daily

The USDIndex has fallen considerably in recent months and developments in China have been a driver of this trend alongside market expectations of a cooling Fed stance. The lifting of restrictions in China throughout November, followed by an optimistic market mood on how the global economic outlook could turn out, added to the positive sentiment in equity markets. Despite this, the global economy is still burdened by the legacy of the pandemic.

However, any changes in housing and infrastructure investments made will result in greater demand for raw materials, which could have a positive impact on the prices of commodities used as production inputs, which are generally ubiquitous.

Platinum prices have retreated from their best level of $1,100.70 on profit-taking, after the sharpest quarterly rise since the first quarter of $2,008, but supply constraints are likely to lift prices this year. The metal traded down to $1,029 on Wednesday, having dropped from a 10-month high a week earlier. Platinum prices have risen from a low of $817.20 in September, as buying activity from China has accelerated in anticipation of a pick-up in industrial and automotive manufacturing following Covid-19 lockdowns.

Inflation is expected to moderate further, supporting higher demand along with a faster-than-expected reopening in China. But industrial platinum demand could be revised lower, if the US and Europe enter recession this year. Supply constraints that supported higher prices last year are expected to continue. Mining companies in South Africa, which account for about 73 per cent of global production, face rising input costs and restrictions on electricity consumption during the continuing energy crisis.

Technical Analysis

Platinum is still moving in a solid up channel, above its 52-day MA and bullish Kumo. RSI is above the 50 level and MACD in the buy zone, although the bearish divergence bias looks faint and a signal line crossing has occurred. Correction above the 817.20 rebound could possibly continue to test the 32.8% retracement level or 965.70 support, but a move above 110.70 resistance would confirm the rally could test the 1179.50 high.

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Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

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