Platinum quotations, in line with the general trend of commodities, ended last week with a strong fall, scared of strong U.S. labor market and prospects of an even greater increase in interest rates by the Fed. Friday's 5% drop was the most powerful drop since September, causing a sharp top-down break of platinum prices at the round 1000 level.
Platinum is starting this week with attempts to stabilize a bit above the 970 level. All the growth of December and January is lost, and prices rolled back to the levels of November. In addition, the downtrend from the local high of last month at 1115 began to emerge more and more clearly. But from the fundamental point of view, things for platinum are not so bad, and the potential for recovery of last week's losses, as well as for renewal of tops, remains.
According to StoneX, 2023 is a profitable time for all precious metals, but the biggest profit should come from platinum, which will surpass gold, silver and palladium.
According to StoneX analyst Rhona O'Connell, the platinum market will be in deficit, leading to a 16.4% increase in the metal's price in 2023, and the target year-end price is $1240 per ounce. The fact that platinum can be used instead of palladium in the automobile industry is probably going to make it the most profitable precious metal this year.
Additional support for platinum may be provided by production problems at the main supplier of this metal to the world market - South Africa. Production this year could drop by up to 20%, which at least would keep platinum out of a serious decline.
The main goal for platinum now is to get back to the 1000 level. In case of success it will be possible to try to break through the downtrend line, but at the moment the level of 1000 looks like a more reliable option for taking profits.
The following trading strategy option can be suggested:
Buy platinum in the range of 970-980. Take profit – 1000. Stop loss – 960.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.
This content is for informational purposes only and is not intended to be investing advice.