FxWirePro: Spotlight on Platinum and Palladium Price Scenarios in H1’2019

South African platinum supply has finally begun to slowly rationalize. Yet, just as necessary cuts will likely gain momentum in 2021, we forecast the trend will reverse as new mines ramp up.

Palladium supply continues to look constrained with scrap offering the highest level of growth over the medium term.

We still see palladium prices remaining supported at or above recent levels for the next six months before coming off the boil in 3Q’19. Platinum picks up the torch from here, in our opinion, rallying throughout 2H’19 as the macro picture becomes murkier.

Palladium prices have continued to build on the bullish breakout and are now trading at nearly $1,180/oz, more than 39% off their low in August. Platinum prices have also trended higher, even slightly outperforming gold, meaning that at current prices around $845/oz, platinum’s discount to gold has dropped back below $400/oz.

The reversal in price trend for both metals is clearly reflected in positioning; however, given the amount of short covering in platinum over the last two months, it’s actually a little surprising we haven’t seen more outperformance (refer 1st chart).

Outside of futures markets, ETF holdings have largely continued their recent trends uninterrupted with platinum holdings still stagnating around 2.5 million ounces while palladium ETF ounces continue to draw, giving the physical markets some much desired additional ounces (refer 2nd chart). Courtesy: JPM

Currency Strength Index: FxWirePro's hourly USD spot index is flashing 30 (which is bullish), while hourly EUR spot index was at 69 (bullish) while articulating (at 07:05 GMT). For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex