PLATINUM TODAY – Prices remain in the doldrums

Short Term: Medium Term: Long Term: Resistances: R1 926 Oct’16 lows R2 928 20 DMA R3 939 DTL R4 1021 Nov 9 peak R5 1090 May peak R6 1195 High so far R7 1207 H&S target R8 1289 Jan ’15 peak Support: S1 957 61.8% Fibo (2016 rally) S2 954 June low S3 9234 20 DMA S4 911 Feb low/HSL S5 889 Low so far S6 811 Jan low S7 807 Support 2004 S8 745 2008 low Stochastics:Bearish Legend: Fibo = Fibonacci retracement level DMA = Daily moving average BB = Bollinger band (H)SL = (Horizontal) support line UTL = Up trend line H&S = Head-and-shoulder pattern Technical Comment Analysis The pullback in platinum has been relentless, with prices falling back to levels last seen in February. On December 15, prices moved below recent support, setting a low at $889 per oz. Prices have since rebounded. So again prices may have found support but they are not seeing much follow-through buying.  It would take a move above recent rebound tops at $952 per oz and the DTL at $939 per oz to make the market look less vulnerable. The stochastics remain bearish so for now prices remain vulnerable. Macro factors Given stronger industrial metals prices, it is surprising that platinum prices have weakened as much as they have. November EU passenger vehicle registrations rebounded, rising 5.8%, having been flat in October. This has removed one concern – following October’s data, it did look as though the EU auto market may be slowing down. Growth, however, was seen in all major EU markets in November. In the first eleven months of the year, registrations were up 7.1%.  Generally strong auto data seems to have been ignored in the second half of the year, with poor jewellery uptake and the gold price weighing on sentiment.  Another bullish feature is that South Africa’s PGM output fell 12% in the year ending October 2016, according to Statistics South Africa. We still see platinum as underpriced at these levels. Given a depressed jewellery market, it may take a recovery here before sentiment turns brighter. A pick-up in economic activity may well bode well for jewellery demand down the road. China is the biggest consumer of platinum jewellery – a turnaround in China’s economic outlook may feed through to more spending on luxury items (in time). The funds’ net long position had become very extended, peaking at 55,949 contracts on August 9. It had dropped to a low of 20,098 contracts by October 25 but was at 25,616 contracts as of December 12. The net long position at 25,616 contracts is in low ground – this year’s range has been 55,949-20,098 contracts. With the gross long and short positions both being cut, it looks as though interest in the metal is waning. Conclusion We felt platinum prices had become oversold – they remain so. Prices appeared to have formed a base but there is little appetite to buy. All trades or trading strategies mentioned in the report are hypothetical, for illustration only and do not constitute trading recommendations.

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