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XPTUSD forecast for 04.08.2020

August 4, 2020

August 4, 2020

XPTUSD forecast: Platinum sticks to turtle tacticsDmitri Demidenko

Fundamental platinum price forecast for today

Slow movements of platinum can be deceiving

Platinum quite quickly reached the first of the targets set in the[ previous platinum price forecast][1] at $940 per ounce. But, next, the price rolled back a little, as traders were concerned the upward movements of the precious metal sector led by gold were too strong. The [XPT/USD][2] bulls were encouraged by several growth drivers in July. They were the weakness of the US dollar, low real yields of the global bond market, and the hopes for a soon rebound of the euro-area economy. Many of those factors still work.

Precious metals have some important features that must be considered in an investment forecast. First, due to the size of the market, they often follow gold. Second, metal prices are affected by economic cycles. They go behind the sector leader at the beginning of the recession and often outperform it during the economic recovery. Thirdly, metal prices are influenced by the territorial factor. For example, the tightening of carbon dioxide emissions requirements in China in 2019 sent palladium to its all-time highs as China is the main consumer of palladium.

The industrial demand for platinum, including autocatalysts production, accounts for more than 62%, and the main consumer is Europe. With this regard, it is natural that platinum was weighed on amid the drop in diesel car production in the euro area by 11% Year-on-Year. Now, the PMI data signal that the euro-area economy is recovering quite fast, which encourages the [XPT/USD][2] bulls.

Dynamics of platinum and euro-area PMI

![LiteForex: XPTUSD forecast for 04.08.2020][3]

Source: Trading Economics

[In the previous article][1], I noted a close correlation between platinum and the euro. It is based on the benefits of a strong currency for imports. I should also note that the French-German fiscal stimulus plan also includes significant spending on solving environmental problems, which suggests a positive long-term outlook for the [XPT/USD][2].

According to speculative positioning, the euro has not exhausted its growth potential. However, if the euro-area economy follows the example of China, whose economic recovery is gradually slowing down, there will the reasons for the correction of the [EUR/USD][4] and platinum.

Dynamics of EUR speculative positioning

![LiteForex: XPTUSD forecast for 04.08.2020][5]

Source: Nordea Markets

Some investors may compare platinum with a turtle, as it doesn’t make such strong, sharp moves as gold or silver. However, turtles are known to be the winners in the long run. The [XPT/USD][2] should be growing slowly but steadily, amid the faster recovery of the euro-area economy than the US growth in 2020-2021.

The uncertainty around pandemic will make central banks stick to the ultra-easy monetary policy for a long time, which is a bullish driver for the entire precious metals sector. The weakness of the US dollar, the euro strengthening, and the growth in the demand for environmental projects and autocatalysts in Europe suggest that it is relevant to hold the XPT/USD longs opened [in early July ][1]and add up to the purchases on the corrections. I suggest the medium-term targets be at $1050 and $1130.

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Price chart of XPTUSD in real time mode

![XPTUSD forecast: Platinum sticks to turtle tactics][8]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. www.liteforex.com/blog/analysts-opinions/xptusd-forecast-platinum-is-to-start-rising/
  2. my.liteforex.com/trading/chart?symbol=XPTUSD&returnUrl=true
  3. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/pmi-platinum-04-08-20.jpg?w=30&s=44511cf25139994328e76ff17add1352
  4. my.liteforex.com/trading/chart?symbol=EURUSD&returnUrl=true
  5. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/euro-cftc-04-08-20.jpg?w=30&s=c6eef6a112af408b602b030fe5dda571
  6. my.liteforex.com/?category=analysts-opinions&slug=xptusd-forecast-platinum-sticks-to-turtle-tactics&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
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  8. cdn.liteforex.com/cache/uploads/blog_post/fundamental_analysis/liteforex-blog-plftinum-04-08-20.jpg?q=75&w=1000&s=e05f9b082613fa70388a1fd03d7d6cab