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Platinum and Palladium Rally Once Again

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Platinum and palladium plunge

All precious metals saw a down day once again on January 28, 2016. Gold, silver, platinum, and palladium retreated 0.01%, 1.6%, 1.6%, and 2%, respectively. The fall in precious metals was most likely backed by the 0.49% rise in the US dollar.

Platinum and palladium have been the worst-performing precious metals, as they are primarily used as industrial rather than precious metals. Platinum and palladium have witnessed falls of 2.2% and 11.3%, respectively, since the beginning of the new year.

Platinum, however, has made a fast recovery, gaining about 5% during the past five trading days. Platinum closed at $867.9 per ounce on January 28, and palladium gave a close of $492 per ounce, once again dropping below the $500 mark.

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Technical analysis

Platinum and palladium are both trading at significant discounts to their 100-day moving average prices. While platinum is at a 3.3% discount to its 100-day moving average price of $911.8 per ounce, palladium is at a whopping 14.8% discount to its 100-day moving average price of $589.7 per ounce. The RSI (relative strength index) for palladium is 45. A level of close to 30 signifies a possible rebound in price.

The gold-platinum and gold-palladium spread rates are visibly increasing and are currently trading at 1.28 and 2.27, respectively. Mining-based companies that have buoyed as opposed to the market’s fall include Barrick Gold (ABX), Agnico-Eagle Mines (AEM), and AngloGold Ashanti (AU). These three stocks make up 16.1% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).

GDX and the leveraged Direxion Daily Gold Miners ETF (NUGT) have risen 7.4% and 23.1%, respectively, on a five-day-trailing basis.

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