Market Overview

1 September 2021

Platinum Seem to Be Waiting for the Upside Wave

Platinum prices are moving along with the Dollar-denominated assets against the Greenback this week. The U.S. Dollar fell under pressure after Federal Reserve (Fed) Chairman Jerome Powell last Friday reiterated his commitment to easy money with vast monetary injections into economy.

The decline of the Dollar was immediately used by alternative assets to make an upside jump in prices, including platinum. It rose from $975 per ounce on August 27 to above $1011 on the last summer day, and now is trading slightly above $1007 per ounce.

The price of it, however, is primarily directed by nuances of the Fed’s monetary policy and by movements of the Dollar rather than by the industrial demand for it. But, the downside movement of the metal seem to be limited. This week two triggers m ay affect the prices. First would come on Wednesday with the information on business activity in the United States. The second would be a release of Non-Farm Payrolls set of data this Friday. Moderate positive expectations regarding the U.S. labour market in August may nudge the Fed towards tighter monetary policy. That may lead to a stronger Dollar and may put additional pressure on Platinum prices while pushing it down to $950-980 per ounce.

But these levels are seen as quite attractive for buyers. Long-term perspectives should also be considered as platinum is primarily used in car manufacturing. The decline of platinum prices from early this year at $1350 per ounce was mostly related to the stagnating car production due to the lagging deliveries of semiconductors and slower than expected economic recovery. However, the increase in recovery pace may trigger additional demand for this metal, especially with the rise of electric vehicles production. Moreover, the share of the produced metal that is used for vehicles manufacturing is expected to grow to 36% compared to 31% in 2020. Considering the above mentioned factors platinum prices may develop their upside momentum above $1100 per ounce in coming months.

 

Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

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