Yesterday, the EURUSD slid from its all-time high at 1.4280 to 1.4180 causing correction movements on the commodities markets. Prices of platinum declined on the spot market from 1,388 USD to 1,346 USD per troy ounce. The contract for delivery of this commodity in January increased to 1,402 USD per troy ounce on the New York Stock Exchange. It is the all-time high for platinum on the futures market.

In the long-term, the platinum market should remain in an upward trend. The expected interest rate cut in the United States for sure will cause economic growth and increased production. That is why the current slide should not last long since the expected economic growth and increased automobile production will increase demand for platinum. For the platinum market it is important since this commodity is used in the production of jewelry and anti-pollution devices used in mufflers. The demand for platinum depends a lot from the car market. Demand for platinum from automakers reached 4.2 million ounce, which was 62% of global demand for this metal.

Increased industrial production and higher demand of consumers caused prices of platinum to increase by 20% this year. That is a bigger increase in prices than gold, which gained 16% throughout the year. Both metals advanced due to a weaker dollar. Some investors buy platinum as an alternative investment for economically dangerous times.

Despite yesterday’s decrease, technical analysis also shows the advantage of buyers. Increased production of cars should keep high demand for this metal. From the technical analysis point of view, prices of platinum came close to an important support level at 1,340 USD. At this level the market should decide, which direction to move. In my opinion, it will not happen since the market will declare itself at 1,446 USD.

Adam Narczewski