Alas, it is normally the case that once financial journalists get on the back of a story, the story is about to end. This very often means inadvertently calling the top – or the bottom of a market run, depending on where it is in its journey. However, while there have been some painful false dawns for the likes of Gold and Silver over the past 10 years. The flaws here have been that the bull argument has very often depended on the elusive “store of value” concept. However, what the “experts” did not count on was no soaring inflation despite QE and a general asset bubble inspired by near zero interest rates. Instead, it would appear that the rally we have seen kicking in properly in H2 2019 has been inspired by the rather more pedestrian sounding concept of supply and demand. This point has been underlined by the way that the geopolitical drivers we have been treated to in recent days have only offered a temporary acceleration to Gold.
What can be seen on the daily chart of the yellow metal has been a brief spike through $1,600 before slipping back to the more sustainable mid $1,500s – maintaining the recovery trend – but not quite as frothy as some might wish to see.
Clearly, the PGM’s, especially in the form of Platinum, Palladium and Rhodium, the supply and demand concept has worked far more notably than store of value, as these metals are now core players in the “Greenification” of the motor industry, especially with reference to catalytic converters. But, perhaps much to the joy of bulls of PGMs we have seen this particular asset class maintain the benefits of being geopolitically sensitive, as well as having a practical purpose helping them maintain their rally.
The stars of the show remain Palladium and Rhodium, with the daily chart of the former still offering a possible $2,400 3 months technical target. At the same time, the short term target of Rhodium allows us to seek out $10,000 on a three months timeframe, given the sharp momentum behind this market.
All of this suggests that even the relatively pedestrian progress of Platinum – a market which appears to be mirroring the conservative price action of Gold, could still retest or even exceed the previous 2019 peak of $1,000 before Q1 2020 is over.
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