For a long time, it was the less lustrous member of the Platinum Group Metals (PGMs), despite leading the group by name. Now, platinum is coming out on its own, rallying for a third straight month to outperform palladium, the dominant metal in PGMs.
Palladium, used as a catalyst and emissions purifier in gasoline-driven cars, has been the costliest-traded major precious metal since 2019 when its spot price overtook gold with record highs just above $2,880 an ounce in February 2020.
In contrast, platinum, which works as a booster and purifier for diesel engines, was relatively late to rally, reaching 4/1-2 year highs of nearly $1,142 an ounce just this month.
But what sets it apart now from palladium and other PGMs—which include even less-known 'white metals' such as ruthenium, rhodium, osmium and iridium—is a 28% price gain in just 10 weeks. That’s what palladium gained all of last year.
Catalytic Demand From Hydrogen-Powered Cars
Platinum also has something else going for it: hydrogen-powered cars. These cars run on hydrogen fuel cells that require platinum as the catalyst. Originally expensive to produce, breakthrough research at the University of Copenhagen last year showed that making hydrogen fuel cells in a more economical manner was possible, potentially reducing the prices for such cars and boosting their demand.
ABN Amro published a note this week, entitled “The Stars Are Aligned For Platinum”, where it spelled out the impact of the hydrogen vehicle component on platinum.
Hydrogen’s fuel cell technology and platinum's role in supporting it will come to the fore this year, ABN-Amro said in the note, which was reproduced on a blog run by bullion merchant Kitco.
Jewelry Demand, Low Price-Base
Said ABN:
"Platinum is used in hydrogen cars and the content needed exceeds what is needed in regular diesel car converters.”
Platinum’s relatively-low price base and demand for jewelry—where the metal was as popular as gold among some users—are other factors likely to drive its consumption, said ABN-Amro.
"Last but not least, platinum is the cheapest precious metal. The ratios of platinum to gold, silver and palladium are still at very low levels. In short, we are positive on platinum as we expect demand to outpace supply."
Charts courtesy of SK Dixit Charting
Price-wise, platinum is in a multi-year breakout trajectory and appears poised to extend its recent peak of $1,142 towards the next targets of $1,152 and $1,199, said Sunil Kumar Dixit, markets chartist at SK Dixit Charting in Kolkata, India.
Dixit added:
“Overall, platinum is in a bullish set up for the medium-to-long term with potential targets at $1,200 and $1,250."
“The prevailing upside momentum should continue as all major moving averages for the metal are in a vantage position. But should it retreat from the $1,110 to $1,090 levels, it can correct to $1,050-$1,010.”
Strong Buy
Investing.com’s own Daily Technical Outlook for platinum is a “Strong Buy” based on its current momentum, which puts Fibonnaci resistance first at $1,130, then $1,136 and $1,147.
Under a reversal, the Fibonacci support will be from $1,108 through $1,101 and $1,091.
The pivot point between the two will be $1,119.
As with all technical projections, we urge you to follow the calls but temper them with fundamentals—and moderation—whenever possible.
Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. He does not own or hold a position in the commodities or securities he writes about.