Platinum Prices: Evolution and Outlook

In this piece, we'll analyze the drivers and movements that have shaped the trajectory of platinum prices since 2020. By the end, we'll offer our insights into potential future trends in this market.

1. January 2020–December 2020: Plummeting and Rebounding during the Pandemic's Rollercoaster

The unprecedented health crisis led to a slowdown in global economic activity because of lockdowns and restrictions. The economic downturn triggered a shift towards safer assets, boosting the dollar's value, which subsequently led to a significant drop in many commodities, platinum included.

Later, the introduction of government stimulus actions and the ensuing economic rebound drove positive price projections for platinum and other metals. As a result, the majority of commodity assets began a global ascent.

From a technical standpoint, the sharp decline in March 2020 broke through a significant historical support level, but witnessed a robust recovery in the final week of March. This convergence of events resulted in a piercing pattern (candlestick analysis) and a spring, which can be defined as a deceptive bearish price breakout followed by a reversal.

2. January 2021–March 2021: Last Push Upward Before the Extended Correction

Concurrent with the dollar index's dip in the first quarter of 2021, the platinum market staged its last upward surge before entering a lengthy correction. It's noteworthy that the price topped out at a historic support/resistance level for this market.

A closer view of this chart illustrates that the top was marked by an evening star at a major resistance level.

3. From April 2021 Onward: The Lengthy Horizontal Correction

Similar to numerous other commodity assets, platinum prices experienced an extended correction following the significant rise from the pandemic's lows.

4. Outlook for Platinum in 2023 and 2024

When forecasting the platinum price trend over the upcoming two years, it's essential to factor in these elements:

• The Supercycle Perspective: Starting from 2020, the commodity market may have entered a phase known as a supercycle. These cycles generally extend for more than eight years, causing notable surges in global commodity prices. If this perspective holds, platinum might witness a sustained uptrend in the foreseeable future.
• The Recession Proposition: Given the Federal Reserve's proactive approach to raising interest rates along with other warning signs from primary indicators, like the inverted yield curve, there's a tangible likelihood of an economic slump around 2024. Commodities, including platinum, often experience pricing strains during the initial stages of a global recession.
• Short-term Technical Indicators: The weekly chart of platinum prices is currently displaying a poorly defined sideways trend. Under these circumstances, predicting the future trajectory of this market is technically challenging in the short to medium term.