Key Points

• Price recovery hinged on global economic performance
• Federal Reserve Stimulus to push prices up
• Covid-19 vaccine good for industrial metals
• Prices trading below ascending Pitchfork

Platinum declined from $1000,00 per ounce when the global economy suffered a setback due to the novel coronavirus. Prices declined sharply and remained subdued as manufacturing activity grappled with the negative implications of the highly contagious coronavirus. The demand for platinum emanates from auto industry which incorporates the metal in the manufacturing of Auto-Catalyst. With the sector currently suffering from reduced demand, the price of Platinum is set to remain weak.

The March 2020 Federal Reserve stimulus measures which evolved in three basic states, interest rates cuts, loans and asset purchases, and regulations charges. The Fed cut its benchmark interest rate down to a range of 0.00% – 0.25%. Additional liquidity was pumped into the economy via Quantitative Easing and this resuscitated the financial markets. Precious metals including Platinum rallied and managed to clear all the loses triggered by the initial market sell-off.

Now the Federal Reserve has got another stimulus package on the table, the magnitude of the package is yet to be agreed upon by the politicians. Therefore, the markets are eagerly waiting for the U.S. Presidential Elections to come to a conclusion which paves way for economic matters to be addressed. Further stimulus pumped into the economy will drive the financial markets even higher.

Another factor influencing the commodities market is the Chinese economy. The world’s second largest economy has managed to quickly shake off the negative effects of the coronavirus and bounce back onto the growth path. In the third quarter of 2020, the economy managed to grow by a handsome 4.9%. In 2021 the Asian giant is forecasted to grow by 7.9%, and the more resolute the growth the higher the demand for metals.

Covid-19 vaccine rhetoric is positive news for industrial metals. The early a vaccine is developed the more the aggressive the bullish run will be on metals. The latest information on the Covid-19 frontier is highlighting that Pfizer is on the brink of developing a fully effective vaccine. Safe havens assets like Gold can decline substantially but Platinum and Palladium are set to climb higher.

On the technical frontier, Platinum is struggling to gain entrance into a medium term ascending channel. Prices are consolidating between the support at the $840 handle, whilst bulls are capped by the $920 resistance. A bearish 2-month cycle is almost over, but does not necessarily guarantees that a bull cycle should now take precedence. A breach beyond the $950 resistance region will cement a strong bullish medium to long-term bullish trend.