Platinum experienced volatile trading as the week started and closed on Monday near the $2,150 price mark. The recent rebound of the precious metal is supporting its price, though further gains are being tempered by a spike in oil prices, a rebounding dollar and stronger yields on U.S. Treasuries.
When the week started, platinum had the strength to build on its recent gains, but this strength lost steam as dip buyers showed muted activity that couldn’t lift the market any further.
For now, traders are watching whether the metal holds its ground and doesn’t slip below $2,100. If it resists that bottom, sentiment could become strongly bullish as market participants watch how quickly the price rises to the $2,150 level and surpasses it towards the highs to which it had soared in recent weeks. As things stand, the price appears to be trying to recover from the recent volatility rather than resuming its upward trajectory.
This recovery phase is one to watch because it could set the tone for the metal’s price movement over the rest of the week.
At the macro level, the biggest factor influencing the current price movement of platinum is the turbulence in global oil markets. Brent crude surged sharply to exceed $100 per barrel, and this has revived concerns about a sharp rise in fuel prices in major markets. This fuel inflation increases concerns about persistent inflation as hotter inflation would compel the Fed to keep interest rates higher, a situation that would exert more pressure on precious metals.
To compound matters, the USD has remained firm and made dollar-priced metals more expensive for people using other currencies to purchase precious metals.
On the plus side, platinum is fortunate to be both a precious metal and an industrial metal. This unique attribute gives the metal a measure of resilience when precious metals are under pressure because the industrial demand for the metal helps to shore up prices. The price movements seen as the week got underway prove that while prices are being pulled downwards by pressures on precious metals, there is a force lifting platinum prices upwards from the industrial demand side.
The supply side of the metal is concentrated in one region, and persistent deficits on global markets are something to watch as one works out the magnitude of the current headwinds slowing the upward price movement of platinum. Enterprises like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) will keep their fingers on the pulse of markets and tweak their forecasts accordingly.
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