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.
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.
Click here to access our Economic Calendar
Market Analyst – HF Educational Office – Indonesia
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.