Platinum vs gold price analysis: is the recovery over?

The gold price versus platinum price shows a correction of the XAU/XPT pair in the short term

Pure gold ore isolated on Reflection background                                 
The current outlook for gold and platinum is flat to negative based on current fundamentals – Photo: Photostock
                                

The World Platinum Investment Council stated in its second-quarter 2021 report that global platinum demand rose by 23% year-on-year to 1,907koz (thousand ounces). For the full year, the forecast is for a 1% increase over last year (2020) to 7,753koz. 

While demand has shown an increasing trend, supply has also risen sharply thanks to the processing of the backlog created by plant outages in 2020. For the full year, the forecast is a surplus of +190koz.

Paul Wilson, CEO of the World Platinum Investment Council, said: “Since the start of this year, the pace of recovery in economic activity has exceeded expectations, with both platinum demand and supply increasing, a trend which looks set to continue for the rest of the year.”

Rising inflation is usually considered bullish for gold’s price but if the Federal Reserve raises interest rates, it will increase the opportunity cost of owning gold. This will make it less appealing as it does not pay any interest. 

OANDA analyst Craig Erlam said in a note quoted by  CNBC: “With downside momentum seemingly slowing, gold could see some reprieve in the near-term but the broader outlook isn’t great.”

The outlook for gold’s price and platinum’s price seems flat to negative based on fundamentals. However, what do the charts project for the XAU/XPT pair? Read our gold price vs platinum price technical analysis to find out.

Platinum price vs gold price technical analysis: weekly chart

Platinum price vs gold price technical analysis: weekly chart
Gold price vs platinum price technical analysis: weekly chart

The XAU/XPT pair recovered sharply from 1.3622 in mid-February to 1.9438 in mid-September, indicating a rise of 42% within a short time. 

Although the pair broke above the 61.8% Fibonacci retracement level at 1.9095, the bulls could not sustain the higher levels. This shows that bears are attempting to sell on rallies.

The bulls are currently attempting to defend the support line of the ascending channel. If the price rebounds off the support line, the bulls will make one more attempt to clear the overhead hurdle.

If the price rises above 1.9438, the pair could climb to 2.0583. If this level is scaled, the pair could complete a 100% retracement and rally to 2.2478. Conversely, a break below the support line of the channel could start a deeper correction.

Platinum price vs gold price technical analysis: daily chart

Platinum price vs gold price technical analysis: daily chart
Gold price vs platinum price: daily chart

The XAU/XPT pair turned down from the downtrend line, indicating that bears are defending this level aggressively. The pair has plunged from the resistance line to the support line of the channel, where buyers are trying to arrest the decline.

A strong bounce off the current level will indicate that sentiment remains positive and traders are buying on dips. The pair could then continue its northward march inside the channel.

On the other hand, if the price breaks below the channel, it will suggest that supply exceeds demand and traders are rushing to the exit. The pair could then drop to 1.70 and from there to 1.5971. 

The bulls will have to push and sustain the price above the downtrend line to indicate the start of a new uptrend.

Platinum price vs gold price: buy or sell at these levels?

The platinum vs gold price 2021 technical analysis shows the pair is in a relief rally. However, the bears have not thrown in the towel yet and are selling near the psychological mark of 2.00. The bulls will have to clear this hurdle to signal a trend change. Alternatively, a break below the ascending channel could start a correction to 1.70 and later to 1.5971.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision. As always, never invest more than you can afford to lose and remember that stocks can go up or down.

Trade 

Gold
Daily change
1769.7
Low: 1760.82
High: 1771.06
Platinum
Daily change
1040.49
Low: 1035.77
High: 1059.12

Further reading

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