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Did Platinum Show a Recovery at the End of December?

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Platinum’s plunge

Alongside gold and silver, platinum and palladium have also retreated about 28.6% and 30.8%, respectively. Platinum, unlike the other precious metals, has seen a smoother downward trajectory. A clear downward trend is visible in the chart below. On December 30, platinum became the worst-performing precious metal with a plunge of 2.2% to touch a low of $853.4 an ounce. Platinum experienced a wider trading range on the same day, ranging from $853.4 to $895.9. The closing price for platinum remained at $872.6 per ounce.

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Technical analysis

The RSI (relative strength indicator) for platinum of 49 is significantly higher than the extremely low level of 17 seen at the start of December. A level as low as 17 signifies an immediate rebound in price just as there was in the first trading week of December. The 100-day moving average price of platinum is at $938.6, which is about 7% greater than its current trading price. A price rebound could occur with such a discount to the critical 100-day moving average.

Mining ETFs and stocks

The prices of platinum and other precious metals have also spread negative sentiments to mining ETFs and stocks. The Direxion Daily Gold Miners (NUGT) plunged 5.9% on Wednesday. The leveraged Direxion Daily Junior Bear Gold 3X (JDST) has gained 68%, a bearish indicator.

Mining stocks Barrick Gold (ABX), Newmont Mining (NEM), and Goldcorp (GG) dropped 2.9%, 1.4%, and 1.9%, respectively, on Wednesday. These three stocks together make up 19.6% of the VanEck Vectors Gold Miners ETF (GDX).

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