In a year in which precious metals are among the best-performing asset classes, the ETFS Physical Platinum Shares (NYSEArca: PPLT) and the ETFS Physical Palladium Shares (NYSEArca: PALL) have spent some time in the spotlight.
Earlier this year, as gold soared, platinum metals got in on that act, too. However, platinum and PPLT recently experienced a lengthy pullback. A strengthening dollar is also weighing on platinum and PPLT. Some traders are wagering dollar disappointment may be near an end as recent commentary from Fed Chair Janet Yellen and other members of the U.S. central bank indicate an increasing level of comfort with the idea of raising borrowing costs sometime over the next several months.
Platinum’s “recent declines have put a halt to an earlier rally in 2016, paring this year’s gain to 14 percent. Investors have speculated that resilient automotive sales would boost consumption. The metal has also increased alongside gold, which is up more than 20 percent in 2016 as the Federal Reserve’s decision to delay raising interest rates further boosted the metals’ appeal as a store of value,” according to Bloomberg.
Although platinum is not as heavily traded as gold or silver, it is the third-most traded precious metal in the world and it is more scarce than its more popular rivals. Industry observers also believe that platinum companies have overextended operations during the commodities boom in prior years and have suffered from an oversupplied market as a result.
Fortunately for commodities investors, a case can be made that PPLT’s technicals are improving and that the ETF could be poised for a near-term rebound.
PPLT’s price “recently bounced off of the support of its 200-day moving average. In technical analysis, this long-term moving average is generally used to identify key pivot points given the predictability of its influence. Notice how the price bounced off the support on each occasion in 2016 since it broke above back in March. Technical traders would expect this behavior to continue, and many will likely look to place their stop-loss orders below $95.65 in an attempt to make the most of the risk/reward setup,” according to Investopedia.
Related: Gold Demand is Robust
Looking ahead, the ongoing negative interest rate environment, with European and Japanese central banks cutting benchmark rates deeper into the red to promote growth, could push investors toward precious metals as a more stable store of wealth.
Moreover, unlike gold, palladium, platinum and silver see much higher industrial demand. The precious metal enjoys heavy industrial demand that benefits from an expanding global economy.
For more news on Precious Metals ETFs, visit our Precious Metals category.
ETFS Physical Platinum Shares
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