Can Anglo American share price make a new high even as Platinum falls?

Summary:

The Anglo American share price has gained 25% from the June low. So how comes the world's largest platinum producer remains unaffected by its slump?

The Anglo American share price has gained 25% from the June low. So how comes the world’s largest platinum producer remains unaffected by its slump?

Anglo American plc (LON: AAL) finished Monday at 3,313p, higher by 25.5p (+0.78%).

The mining sector has reaped the benefits of rampant commodities prices in the wake of the Covid-19 pandemic. Over the last year, supply constraints, increasing demand, and supportive monetary policy have contributed to a perfect storm for metals prices.

And like its larger rivals, BHP and Rio Tinto, Anglo American has had a good time of it in 2021.

AAL has increased by around 34% since the start of the year. Furthermore, the Anglo American share price is up more than 220% from the March 2020 pandemic low.

However, Anglo is the world largest platinum producer and is responsible for around 40% of the global output. And unlike many commodities, the Platinum price is lower in 2021. Since the start of the year, Platinum has dropped 14% as South African miners return to work. However, Anglo produces more than just platinum.

The multinational mining companies assets include Copper, Iron ore, Nickel diamonds.

And while platinum has struggled, those others have continued to appreciate this year.

As a result, Anglo American revealed bumper profits for the first six months of 2021, boosting shareholder rewards with an interim dividend. This sent the price to a three month high of 3,444p last week. However, the stock retreated around 6.75% before yesterday’s bounce.

But the question is, can AAL maintain the positive momentum, and how high can it go?

AAL price forecast

The weekly chart shows the Anglo American share price runs into strong resistance at January 2011’s 3,462p high. Despite clearing the resistance in May, the price failed to gain momentum and reversed.

Therefore, 3,462p is a significant resistance level. If Anglo closes above this barrier on the weekly time-frame, it should extend higher. The ultimate target for the bulls is the 3,683p double top which formed between 2007-2008.

And considering the supportive backdrop, this looks probable. However, the price is stretched on the daily time frame and therefore may be vulnerable to a pull-back.

Additional headwinds include the COVID-19 outbreak in China. The Asian nation is a vital consumer of Anglo’s products, and a material slowdown in consumption would negatively impact AAL.

On that basis, whilst the long-term outlook remains positive, investors may wish to see how the Delta Variant affects the world’s largest consumer of raw materials before making an investment decision.