With a bullish start to 2020 for many commodity markets due to the escalation in tensions between Iran and USA, we see potential for the start of the new bull market in platinum. Looking at the chart from a purely technical perspective, a confirmed trend line on the weekly chart has broken, with a solid support zone keeping the price above $750. Final confirmation would require the price to break and close above $1000 level. Fibonacci retracement gives us a long-term target at $1700, the 61.8% level.
On the 4-hour chart we see how buyers were getting stronger with higher lows before a break of the trend line. A potential retest could occur before the break of the $1000 level, providing a better buying opportunity, with improved risk management.
The supply of platinum comes largely from South Africa, roughly, 70% is produced there. It therefore makes the political climate in South Africa a very important factor. For instance, the strikes from workers in 2014 caused a big slump in platinum prices. For this reason, it is also important to keep track of the USDZAR pair, as revenues received by miners are in USD. So USD depreciation can have a negative impact on supply, although the correlation has been somewhat muted for the past 5 years with regards to USDZAR.
Platinum is largely used in the jewellery industry with many brands making expensive products using platinum.
The automobile industry also uses platinum in its fuel cells and to reduce emissions in diesel and hybrid cars. The recent boom in the electric industry could decrease demand in platinum but so far the use of this metal continues on a stable basis.
It is also, used a lot in laboratory equipment and computer technology like disks, computer chips and other hardware.
January is the month when large investments are put into assets for the year. So, this could be the opportunity to get into the trade with potential to add along the way.