Platinum price rallied for the sixth straight day as the market remained optimistic about the reopening of the global economy. The price rose to an intraday high of $850 while that of palladium rose to an intraday high of $2,110. Other precious metals like gold price and silver price rose by more than 80 basis points.
Platinum price rises as demand set to rise
To starters, platinum is a metal that belongs to the Platinum Group Metals (PGMs). These metals are known for its softness and malleability, making it easy to use. The metals is used as a catalytic converter in vehicles. As a converter, the metal helps to reduce pollution. Most of the platinum that is mined is used in disel cars while palladium is used mostly in gasoline vehicles.
Most platinum is mined in South Africa, Zimbabwe, North America, and Russia. The biggest consumer of the metal are in China, Mexico, and Germany.
This year, the price of platinum has been affected by the coronavirus pandemic, which has led to low demand for cars. All automakers have announced mediocre vehicle numbers. Just yesterday, data from Europe showed that sales dropped by more than 50% in April.
Fortunately, low demand has also been offset by a decline in mining. Most countries that produce platinum were in lockdown, that affected production. In a recent report, World Platinum Council (WPC) said that production in Russia declined by 26% in the first quarter. Total supply fell by 6% in Q1. Similarly, the platinum got through recycling has been flat.
Demand also has declined. Demand from automotive and jewellery has declined by 17% and 26% respectively. Industrial demand has been flat while bar and coin demand has risen. This has led to a surplus of 124 koz.
Still, platinum price may continue rising as more countries reopen. Recent news show that activity in China has started to increase.
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Platinum price technical outlook
Platinum price rose to an intraday high of $850. On the daily chart, the price is approaching the 61.8% Fibonacci Retracement level. The price is also slightly above the 50-day and 100-day exponential moving averages. The price has also moved above the Ichimoku cloud. Therefore, the price may continue rallying as bulls attempt to retest the 61.8% Fibonacci retracement level of $860.
On the flip side, a move below $805 will mean that there are more sellers in the market. This will invalidate this price and will see more sellers attempt to push the price below $800.