Precious metals analysis: Palladium and platinum outshine gold and silver

Amid relatively quieter market conditions in the stock markets, you might have missed a few moves in the commodities space. In particular, in the precious metals sector where platinum and palladium are up over 10% each on the week. Silver is also looking perky after breaking above its bearish trend line following a lengthy consolidation. Gold is up for the third day, now back above $3,300. Safe haven currencies area also on the rise, as bond yields extend recent gains amid inflation worries. Buckle up, something’s about to snap.

US dollar weakness support metals

Part of the reason behind these moves has been the US dollar, which continues to remain under pressure. As global bond markets wobble — led by a sharp move in Japan — traditional safe havens like the yen and gold are reasserting their place. Meanwhile, growing concerns over America’s fiscal outlook are adding further bearish momentum to the dollar. I think all else being equal, it should mean even higher demand for haven assets. Usually, the yen and gold move in tandem so the recent developments in the Japanese bond market is potentially supportive for gold, even if higher yields have historically been associated with rising opportunity cost for non-interest bearing assets.

China concerns supply shortage also boost metals

What’s more, gold and silver are also finding support from the precious metal sector as a whole, with palladium and platinum surging higher this week with gains of nearly 10% each. Palladium has reached its highest level in over 3 months, not only because of platinum’s corresponding jump above $1,000 level, but the other precious metals have also seen support with gold and silver showing renewed strength of late. It is all to do with easing concerns about demand in China, owing to optimism about a trade deal with the US. The fact that the Chinese yuan has also risen of late means the purchasing power of Chinese manufacturers are rising. To make things worse, above-ground stocks of platinum were already dwindling and the fact China imported its highest amount of the precious metal in a year last month suggests there could be a shortage of supply. On a micro level, Honda’s decision to pivot more toward hybrids over EVs, is potentially a significant development for long-term demand for palladium and platinum given their usage in catalytic converters.

Precious metals technical analysis: Key levels to watch

Here are the charts of the four precious metals, all looking interesting:

Platinum breaks multi-year bear trend

Platinum has surged past the $1K level to reach a high so far of $1084, now around $10 shy of its May 2024 high of $1095. The break of the multi-year bearish trend line is reminiscent of gold going something similar a few years ago. We all know what happened since. Could platinum follow suit? Key support now comes in at $1K, the base of the breakout. Short-term support is seen around $1054.

Palladium takes out $1,000 level and key resistance

Has broken above the $1K level this week to move above its 200-day average. Key support is now in the range between $980 to $1,000, where previously the metal had encountered resistance. On the upside, resistance is seen around $1050 area initially, with $1085 next. Above this area, there is nothing important until $1,200 level, with the October high of $1250 being the next upside objective.

Silver breaks out

After making a V-shaped recovery post the April dump, silver went on to consolidate those gains over the past several weeks. It looks like that consolidation has finally been resolved with price breaking higher after the metal took out its bearish trend line connecting the recent highs. Support is now seen at $33.00 initially, formerly resistance. Below that $32.00 is the next key level. The March 2025 high of $34.60 is next in focus with the October 2024 high of $34.87 the next target.

Gold key levels to watch

Last week’s drop in the gold price chart ended with the metal bouncing from its one-year old bullish trend line and support around $3,120-$3,167 range. This area will be key on any future dips – bearish if we go below it. Interim support is now seen between $3,245 to $3,275. Resistance comes in at $3,360, marking the short-term bearish trend. Above it, $3,400 and then the all-time high of $3,500 are the next key levels.

Source for all charts used in this article: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R