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Palladium, Platinum Off 2021 Lows: Will The Rebound Last?

By Investing.com (Barani Krishnan/Investing.com)CommoditiesOct 12, 2021 04:30AM ET
www.investing.com/analysis/palladium-platinum-off-2021-lows-will-the-rebound-last-200604760
Palladium, Platinum Off 2021 Lows: Will The Rebound Last?
By Investing.com (Barani Krishnan/Investing.com)   |  Oct 12, 2021 04:30AM ET
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​​The spot price of palladium has rebounded from a near two-year low while that of platinum has bounced as well, after nearing a one-year trough. Are both on the cusp of a continued recovery that makes them “safe-buys?”

“Hardly” would be the reply from a fundamental point of view. But “probably” might be appropriate from a technical perspective.

The difference in the two responses could not be more distinct.

Anyone who follows PGMs, or platinum group metals, will know that palladium is used primarily as an emissions purifier for gasoline engines while platinum serves the same function for diesel cars. 

The global semiconductor shortage and its throttling of auto production is far from over and as such, the most important fundamental aspect of demand for the two PGMs is far from assured. 

Therein is the basis for the first answer.

Palladium Monthly
Palladium Monthly

All charts courtesy of skcharting.com

Now for the second part—technicals. 

After a five-month long dive in prices that took spot palladium to a 23-month bottom of just under $1,856 an ounce and spot platinum to a 11-month low of $953—both in September—the two PGMs appeared to have seen their worst for now.

In Monday’s session in New York, spot palladium advanced 1.6% to settle at $2,112.18. Analysts mostly attributed the bounce to short-covering after December platinum’s tumble to support levels of around $1,855.

Most-active platinum futures for January, meanwhile, slid 1.7% on Monday to $1,008.37. 

PGMs analyst Soni Kumari of ANZ said:

“Fundamentals haven’t changed much with the auto sector continuing to face challenges due to micro-chip shortage. Until we see auto production recovering meaningfully, which will depend on availability of semiconductors, we expect PGMs (platinum group metals) to remain volatile.” 

So, will the nascent technical recovery in spot palladium last?

Possibly, if it doesn’t crumble at its next target high of $2,400, said Sunil Kumar Dixit, chief technical strategist at skcharting.com.

Palladium Weekly
Palladium Weekly

He said the palladium weekly chart has displayed a reaction of sorts, shying away from the 200-week Simple Moving Average while holding a positive overlap of the Stochastic Relative Strength Index from below the 20 line.

“However, it remains to be seen whether the showdown will continue in favor for the bulls and continue to scale up to the 100-week SMA of $2,290 and the 50-week Exponential Moving Average of $2,400, or bears will reject the bounce back and push the metal down to the 200-week SMA of $1,760,” Dixit said.

If the downside persists, spot palladium could see a short-term correction to $2,025, that may extend to $1,950, “before resuming the upside momentum to test $2,290 and $2,400”, he added.

Platinum Weekly
Platinum Weekly

Spot platinum, meanwhile, has completed its sideways to down move as per the target range of $895-$1,035, Dixit said.

“Going forward, the weekly chart for spot palladium shows prices are likely to be supported by the 100-SMA of $985. This will help the metal to spend some time for accumulation and consolidation between the $985 support and $1,040 resistance.”

Platinum Monthly
Platinum Monthly

“Breaking and sustaining above $1,040 should be followed by further upside attempts at $1,080. We see platinum reclaiming the $1,080-$1,110-$1,140 levels over an extended period of time, subject to prices holding above the 100-week SMA of $985 for the time being. Breaking below $893 can invalidate the theory.”

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. For neutrality, he sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.

Palladium, Platinum Off 2021 Lows: Will The Rebound Last?
 

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Palladium, Platinum Off 2021 Lows: Will The Rebound Last?

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Comments (9)
SunilKumar Dixit
SunilKumarDixit Oct 13, 2021 11:56AM ET
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Palladium tested short term key support level 2025 and jumped to test 2145.....120 points isn't bad I guess
Robert Flores
Robert Flores Oct 12, 2021 10:37AM ET
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What happen to platinum as safe haven? It used to trade at a premium to gold ! It is more scarce than gold - its very hard nowadays to get physical platinum
Laid Zipleen
Laid Zipleen Oct 12, 2021 7:27AM ET
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Prices will stay volatile while supplies last. All platinoïd metals are considered strategical. Pt, ********and Rh already are at critical levels. Scarcity will make the rest.
Laid Zipleen
Laid Zipleen Oct 12, 2021 7:27AM ET
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Plat, Pal and Rhod
Zula Umar
Zula Umar Oct 12, 2021 7:22AM ET
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I need to help investing
Zula Umar
Zula Umar Oct 12, 2021 7:19AM ET
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Hello I'M Zula Umar
Oyim Mark
Oyim Mark Oct 12, 2021 7:09AM ET
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I don't understand Dis business
Laid Zipleen
Laid Zipleen Oct 12, 2021 7:08AM ET
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Platinum breaking below 893 ? or 983 ?
SunilKumar Dixit
SunilKumarDixit Oct 12, 2021 7:08AM ET
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Laid Zipleen. 893 being the recent swing low, breaking below this level is critical as prices holding this level can start further slide. However, 983 is 100 week SMA, below which, short term correction and consolidation may be seen. We appreciate your comments.
Laid Zipleen
Laid Zipleen Oct 12, 2021 7:08AM ET
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SunilKumar Dixit  Oh yes I see. thank you
LARRY QRISZY
LARRY QRISZY Oct 12, 2021 7:06AM ET
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How can I start cashing out
David Klepetko
klepid Oct 12, 2021 4:44AM ET
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fundament is prevalent here as with any commodity
Md Kulil Miya
Md Kulil Miya Oct 12, 2021 4:44AM ET
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