Platinum price forecast 16 February 2021

2021-02-16

Platinum: Don’t kick a sleeping dog. Forecast as of 16.02.2021Dmitri Demidenko

That is the market: victories and fame follow losses. A typical example is platinum, which has grown by more than 20% in value since the beginning of 2021. Where will the [XPTUSD][1] in 2021? Let us discuss this topic and make up a trading plan.

Fundamental platinum forecast for a year

We all seek what is better, and investors and produces seek what is cheaper. Platinum could replace more expensive gold when hedging against inflation risks and more expensive palladium in the car industry. Therefore, the [XPTUSD][1] has hit its six-year high. Since the beginning of the year, the platinum price has been up by 21%, significantly outperforming other precious metals, which meets investors’ expectations. Remember, [in late 2020][2], I suggested platinum purchases be one of the best trading strategies in 2021.

Dynamics of precious metals in 2021

Source : Wall Street Journal

According to Johnson Matthey research, the precious metal market was in a moderate deficit last year amid a 20% drop in production due to a lockdown in South Africa and other producing countries and a 22% decline in global autocatalyst demand. Europe suffered particularly badly. Care sales in the euro area fell by 40% at the recession peak and recovered to 20% Y-o-Y by the end of 2020. In 2021, the precious metals market structure should radically change, which encourages the [XPTUSD][1] bulls.

Platinum supply and demand

Source : Johnson Matthey

Furthermore, substantial price spreads between gold and platinum have boosted investors’ interest in XPT as a cheaper metal. According to the World Platinum Investment Council, the platinum ETFs holdings reached 3.9 million ounces at the end of January, up from 3.4 million ounces a year earlier. According to Johnson Matthey, the market balance and, accordingly, the platinum prices will largely depend on the demand for the platinum ETF products.

Dynamics of net changes in platinum ETF holdings

Source : Johnson Matthey.

An essential driver of the [XPTUSD][1] rally is the platinum’s ability to replace gold in investments and palladium in the production of automotive catalysts for gasoline engines. Both assets of the platinum group could be pressed by the advent of the electric car era. However, if hydrogen fuel technology that uses platinum becomes widespread, it will drive up the XPT prices even higher. Even it doesn’t occur now, but a few years later, it doesn’t matter. Expectations drive markets.

Massive fiscal stimulus, ultra-easy monetary policy, the growing chance of the inflation rise, and the US dollar’s weakness create a favorable environment for the gold price rise. However, the [XAUUSD][3] is not growing. One of the reasons is that gold is an overbought asset. In 2020, the XAUUSD was 24% up. Investors are likely to realize this fact and are ow interested in other precious metals. The most appealing is platinum; it looks like a dog, who was kicked and is now picked.

Platinum trading plan for a year

Platinum could repeat the gold’s success, which performed the best rise in 2020 over the past decade. The platinum price has already reached the target at $1330, defined in [December][4] and [January][5]; it is at the beginning of the commodity market super-cycle. If so, it is time to revise the expected profit for the [XPTUSD][1] longs up to $1420 per ounce for 2021. I recommend holding and adding up to long positions on the corrections.

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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