Platinum to Outshine Gold in ’13?
?? Fundamentals
Platinum prices have jumped to the highest level since October, after Anglo American Platinum announced it would cut production. By shutting the four mine shafts in question, the company is slashing output to the tune of 400,000 ounces a year. Platinum is used by the auto industry in emission control devices, such as catalytic converters. Demand for the metal has been fairly consistent, and many are predicting a strong year for automobile sales globally, which could really stress supplies.
Platinum is the rarest of the precious metals, and while 400,000 ounces may not seem like very much, it accounts for almost 20% of the company’s output. Amplats accounts for 80% of world output of Platinum. Precious metals have also gotten a boost due to the uncertainty over the debt ceiling, which needs to be resolved by late February by most estimates. That is the timeframe in which Executive Orders and other preventative measures would likely run out. Like the Fiscal Cliff talks, squabbling by both sides could derail equity and commodity prices.
?? Technical Notes
Turning to the chart, we see the April Platinum contract rising $200 in just a couple of week’s time. Prices are rapidly approaching resistance at the 1730 level. This resistance can be seen as significant, as a breakout would suggest a possible test of 2011 highs near the 1875 level. In the near – term, prices could potentially stall or pause, as the market is in overbought territory. The RSI moved from oversold to overbought levels over the same two week span that saw the steep price increase.
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