For a long time, he was the least bright member of the platinum group of metals (PGM), although he led the group by name. Today, platinum is emerging from the shadows on its own and struggling for a third consecutive month to outperform palladium, the dominant metal in the PGM group.
Palladium, used as a catalyst and emission purifier in gasoline-powered cars, has been the leading precious metal traded since 2019, when its spot price surpassed that of gold, with records of just over $2,880 per ounce in February 2020.
In contrast, platinum, which serves as a gas pedal and purifier for diesel engines, has been relatively late in recovering, reaching its highest level in 4/1-2 years this month at nearly $1,142 per ounce.
But what now sets it apart from palladium and other PGMs, which include even less well-known “white metals” such as ruthenium, rhodium, osmium and iridium, is a 28 percent increase in price in just 10 weeks. This is what palladium has gained throughout the past year.
Demand for hydrogen-powered cars
Platinum also has another advantage: hydrogen-powered cars. These cars run on hydrogen fuel cells that require platinum as a catalyst. Originally expensive to produce, cutting-edge research conducted last year at the University of Copenhagen showed that hydrogen fuel cells could be made more economically, which could reduce the price of these cars and boost demand for them.
ABN Amro this week published a note entitled “The Stars Are Aligned For Platinum”, which explains the impact of the hydrogen vehicle component on platinum.
Hydrogen fuel cell technology and the role of platinum in supporting it will be highlighted this year, ABN-Amro said in the note, which was reproduced on a blog maintained by ingot trader Kitco.
“Platinum is used in hydrogen cars and the amount needed exceeds that of converters for ordinary diesel cars”.
The relatively low price of platinum and the demand for jewelry – where it is as popular as gold among some users – are other factors likely to stimulate its consumption, said ABN-Amro.
“Finally, platinum is the cheapest precious metal. The ratios between platinum and gold, silver and palladium are still very low. In short, we are positive for platinum because we believe that demand will exceed supply”.
In terms of price, platinum is on a multi-year breakneck trajectory and appears poised to extend its recent peak of $1,142 to the next targets of $1,152 and $1,199, said Sunil Kumar Dixit, market chartist at SK Dixit Charting in Kolkata, India.
“Overall, platinum is in a medium to long-term bullish configuration with potential targets at $1,200 and $1,250”.
“The current bullish momentum is expected to continue as all major moving averages for the metal are in an advantageous position. But if it retreats from the $1,110 to $1,090 levels, it can correct to $1,050-1,010”.
Favourable technical outlook
Investing.com’s Daily Technical Outlook for platinum advises “buy strong” based on its current momentum, which places Fibonnaci’s resistance first at $1,130, then at $1,136 and $1,147.
If reversed, Fibonacci support will be $1,108, $1,101 and $1,091.
The pivot point between the two will be $1,119.
As with all technical projections, we invite you to follow the calls but temper them with fundamentals – and moderation – whenever possible.
