There is a well-chronicled seasonal spreading strategy published by Moore Research Center Inc. (MRCI) that reveals how platinum futures historically have outpaced gold futures during the October through April period over the last 15 years.
That doesn't mean gold is set for a crash, but it does underscore a seasonal tendency for platinum to outperform gold during that time period.
Platinum is both a precious and an industrial metal. Industrial applications include wide use in automotive catalytic converters. Platinum is especially efficient in diesel engines. Diesel is projected to overtake gasoline as the number one transportation fuel by 2010, according to research by ExxonMobil, which ultimately should support underlying demand for platinum in the industrial sector.
According to a BofA Merrill Lynch Global Research report, the firm forecasts gold prices at $1,225 in 2015, with platinum at $1,438 and palladium at $925. Those represent healthy gains for both platinum and palladium from current levels—see the charts below.
All the metals are projected to continue to rise in 2016, with a forecast at $1,300 in gold, $1,600 in platinum and $1,000 in palladium. Farther out in 2021—the BofA Merrill Lynch Global Researchreport forecasts continued gains with gold at $1,508, platinum at $2,001 and palladium at $1,053.
What are the key levels to watch now?
January platinum futures have carved out a type of "triple bottom" on the daily chart. See Figure 1 below. Strong support has formed in the $1,186 to $1,175 region. The key technical chart points are seen at Point A and Point B, the December swing high at $1,256 and the October 9 high at $1,294.80. It would take a strong rally through the $1,295 region to confirm a major bottom on the daily chart and open up the door to a strong rally move in the months ahead.
Shifting over to palladium, BofA Merrill Lynch research highlights palladium as a potential winner in 2015. "Palladium has been in deficit for years and as such has the strongest fundamentals in the metals complex. This gives a firm foundation for further price gains going forward," according to a BofA Merrill Lynch Global research note.
The palladium chart looks healthy and strong. Take a look at Figure 2 below, a monthly continuation chart of palladium futures.
Drilling down to a daily chart of palladium, the 2015 price target identified in the BofA Merrill Lynch Global Research report leaves scope for a big rally ahead.
Bottom line? Gold may face some headwinds in 2015 amid U.S. dollar strength and tighter monetary policy from the U.S. Federal Reserve, but longer-term targets still estimate higher prices for gold in the years ahead, along with strength in both platinum and palladium.
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