While the momentum in gold is beginning to slow down, platinum is still running, with a related exchange traded fund recently breaking above its long-term trend line.
The ETFS Physical Platinum Shares (NYSEArca: PPLT) is up 3.2% over the past week and 6.4% over the past month, trading 1.5% above its 200-day simple moving average. Meanwhile, the platinum spot price is now hovering around $968.3 per ounce.
Investment demand has supported the recent gains.
“Investor demand for platinum is picking up – the metal has reached a 4-month high, and global physically backed platinum ETF holdings are up 6% year to date,” Maxwell Gold, director of investment strategy at ETF Securities, said in a note.
The move is surprising given the falling industrial demand for platinum, notably slowing global auto sales and negative diesel sentiment. Platinum is a major component in catalytic converters for diesel engines to help reduce toxic pollutants in exhaust gas.
“Negative sentiment on diesel engines continues to hit headlines, but continued supply side slowdown, concerns surrounding Russian sanctions, and drawdowns on existing platinum inventories have boosted prices recently,” Gold said.
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Platinum is currently experiencing its best weekly advance since January after rising for six consecutive sessions as the U.S. imposed further sanctions on Russia, the world’s second-biggest producer, Bloomberg reports. The increased political tension between Russia and America has contributed to the rise in the white metal.
“We currently like the risk-reward for platinum over the next year, and our base-case sees platinum’s fair value near US $1,020/oz as defensive asset demand and global growth may support platinum, despite recent weakness,” Gold added.
For more information on the platinum market, visit our platinum category.