Summary: Spot platinum has popped higher this morning, thereby challenging the downtrend from 2011, while breaking above previous resistance at $877/oz
That resistance level is now support and the pop higher is happening as relative value traders take a closer a look at the deep discounts to both gold an palladium. We have seen no particular trigger behind the move which is likely to be momentum and spread driven.
Our breakout model is going long PLN9 on a daily close above $879.9 (with an initial stop at $782.5). However with the disclaimer that the average signal p/l based on our back testing has yielded an average return per signal of -2.2% since 2003.
With gold currently struggling to break higher amid recent dollar and stock market strength traders have instead cast their eye on relative value plays. With silver still stuck in the mud despite trading close to a multi decade low relative to gold, the focus has instead moved to platinum. Not least because of all the attention the Platinum Group Metals have received recently with the tight-fundamental-driven surge in palladium. On that basis a renewed bid in gold, especially if it manages to break back above $1,300 may benefit platinum more than the yellow metal itself.
Money manager,s meanwhile, in the week to March 26 increased their bullish bets by 8,351 lots to 11,445 lots, a one-year high.