The deeper gold is falling, the higher platinum is rising. Investors look for alternatives to gold, which is now rather weak. This is not the only growth driver for the XPTUSD. Let us discuss the precious metals market outlook and make up a trading plan.
Fundamental platinum price forecast for a year
For Glory is often followed by Oblivion, and not all yesterday’s brightest stars manage to shine again. Less than ten years ago, platinum was the most expensive precious metal. However, following massive sell-offs in 2011-2015, investors soon forgot about platinum, and the platinum price entered the long-term consolidation range of $780-$1040 in 2016-2019. Strong demand for gold in the investment sector and palladium in the autocatalyst industry have allowed these assets to surpass yesterday’s leader, but times are changing. And platinum should grow in price.
By the end of November, XPTUSD rose almost 15%, while XAUUSD dropped more than 5%. Investors are selling gold, fearing that the situation of none years ago will repeat. At that time, the reflation didn’t occur as had been expected, even amid massive monetary and fiscal stimulus. ETFs gold holdings are contracting; their buyers are looking for an alternative and find it in platinum. What looks like the end of the bull market for gold, for platinum, is just the beginning of a long-term uptrend.
Dynamics of gold and platinum
Source: Wall Street Journal
There is a solid foundation under the emerging bullish trend in XPTUSD. According to the World Platinum Investment Council, demand for platinum in 2020 will exceed supply by a record of 1.2 million ounces. The market will be in deficit over the next several years due to the limited platinum supply and the growing demand for its use in hydrogen technologies. According to the CRU Group research, a car powered by a hydrogen fuel cell would require almost four times more platinum than is currently used in a diesel car with a platinum autocatalyst. So, it is natural that Joe Biden’s pledge to spend $ 2 trillion on clean energy sent the XPTUSD up.
Dynamics of platinum physical market balance
Source: Wall Street Journal
The euro also support the platinum uptrend. In 2019, more than half of the autocatalyst platinum demand was from Europe and China. The stronger is the euro, the more favorable environment is for imports. These factors justify a close correlation between the EURUSD and XPTUSD.
Dynamics of EURUSD and platinum
Source: Trading Economics
Platinum trading plan for a year
Financial markets are changing all the time. Winners become losers, and the outsiders become the favorites. I think this is true for platinum. The platinum bullish market is just beginning. The long-term consolidation must have ended. So, purchases should yield quite a profit in the future. The capitals are flowing out of the gold ETFs to platinum exchange-trades funds. The transition from more expensive palladium autocatalysts to cheaper ones and, most importantly, the widespread use of platinum in hydrogen technologies suggest the XPTUSD will be growing in value. The primary trading idea is to buy. The medium- and long-term targets are the levels of $1150 and $1330 per ounce.
XPTUSD current rate in the Forex market:
XPTUSD = 994.34
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