A platinum-related exchange traded fund surged back above its short-term trend line Monday as the ongoing market volatility pushed investors to safe-haven precious metals and bargain hunters jumped on the cheaper value in the white metal.
The ETFS Physical Platinum Shares (NYSEArca: PPLT) rose 3.4% Monday and broke back above its 50-day simple moving average while the platinum spot price was 3.2% higher to $859.5 per ounce.
PPLT broke down to an all-time low last week after the precious metal tripped to a seven-year low of $806.3.
Platinum, along with other precious metals, rallied Monday on safe-haven demand as the equities market weakened on concerns over the global economy and the continued decline in oil prices.
Moreover, the precious metals group may have been gaining strength on increased speculation that the Federal Reserve may push off on rate hikes until later this year due to the increased volatility and economic uncertainty.
“In particular, given the events of the last few weeks and the data we’ve gotten, I think that makes it even less likely,” Gus Faucher, senior economist at PNC Financial Services Group, told Bankrate.
While the metal commodities are a good store of wealth, the assets are less attractive in a rising rate environment since they do not provide a yield.
Platinum was also gaining momentum Monday after the precious metal hit a seven-year low last Thursday.
“Platinum prices look increasingly oversold so this rebound may have a chance of running higher. But with the downward trend dominating, that might be expecting a lot. We are still waiting for a catalyst to emerge to change market sentiment,” FastMarkets’ William Adams told thebulliondesk.
The platinum group could find further from the auto industry – platinum is used in automobile catalytic converters to help diminish toxic emissions. For example, China’s push toward better air quality could improve gas emissions standards for cars and increase demand for platinum for catalytic converters.
Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) gained 0.6% as Comex gold futures were up 0.9% to $1,106.1 per ounce.
ETFS Physical Platinum Shares
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.