Platinum quotes, unlike most other precious metals, do not tend to go into a short-term correction, and continue to move upward. Yesterday platinum was trading above $1100 per ounce for the first time since January, having only a small distance to its yearly high at $1115. At the same time, the price has risen by 10% during only one week, and a slight pullback is quite possible before a new hike to the maximums.
The news background in the platinum market remains mostly favorable. According to the World Platinum Investment Council (WPIC), the metal is an attractive asset for investors looking for maximum profitability. Analysts note that strong economic data from China is contributing to strong demand for jewelry, including platinum.
In recent years, platinum has not been a very attractive asset because of declining demand in the automobile sector, where palladium was preferred. These metals are critical components of catalytic converters, which are used to reduce harmful emissions from gasoline and diesel vehicles. However, due to the strong increase in the price for palladium, automakers returned to using cheaper platinum.
Platinum is also becoming part of the global transition to green energy. It is used as a catalyst to split water into oxygen and hydrogen. Then the hydrogen is used as an energy source. Philip Streible, chief market strategist at Blue Line Futures, believes that it is only a matter of time before platinum prices rise above this year's highs that were set in January. According to Streibl's forecasts, the price of this metal should rise above $1200 for the first time since June 2021.
The target for a short-term correction in platinum could be the level of 1070. Yesterday's drawdown of quotes stopped just at this point. In the future it is expected to renew the growth with the first target at 1100 and the second target at 1115.
The following trading strategy option can be suggested:
Buy platinum at the drop in price to the level of 1070. Take profit 1 – 1100. Take profit 2 – 1115. Stop loss – 1050.
Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.