Platinum Price Forecast: Under Pressure From Strong Dollar and Reduced Safe Haven Appetite

Summary:
• Platinum prices have declined on Wednesday as geopolitical pressures cool and the market expects hawkish Fed policy to keep the dollar strong.

Platinum prices were down on Wednesday as commodities markets experienced a broad selloff. The silvery metal traded at $934.02 per ounce at the time of writing after losing 0.15 percent of its value in intraday trading. The commodity stares at the likelihood of recording a second successive day of losses and potentially reversing the upturn signals sent in late April.

There has been a general decline in safe haven demand for precious metals, including platinum, palladium, silver, and gold. This has been driven by the cooling of geopolitical tensions in the Middle East in the last two weeks. Furthermore, the US dollar has been stronger than most leading fx market currencies during that period, making it more expensive to purchase precious metals.

However, Israel’s Prime Minister Benjamin Netanyahu threw a spanner in the works on Tuesday when he reiterated that a ground offensive on the highly-populated Rafah city would go on with or without a ceasefire deal. That could add geopolitical premium to platinum prices and help it reverse recent losses. Many  analysts have stated that a ground offensive in Rafah would be a significant turning point in the nearly six-month old war. However, there has been no escalation in recent weeks despite threats from either side, making many commodity prices unresponsive to such news.

Meanwhile, the US dollar is likely to be the single-largest source of headwinds to platinum prices. The DXY has returned above 106, signaling a continuation of strengthening against six of the major global currencies. Also, the Federal Reserve is expected to retain the current 5.25%-5.0% interest rate in its announcement on Wednesday, and that is expected to buttress the dollar’s strength. Furthermore, high-yielding US treasury bonds will continue to be more attractive to investors than non-yielding platinum. As of this writing, yields on benchmark 10-year US treasury bonds are above 4.680%.

Technical analysis

Our platinum price forecast shows that the pivot is at 935.21, and the downside is likely to prevail if resistant remains at that mark. With the sellers in control, the commodity will find the first support at 930.00. Furthermore, a continuation of the bearish control could break the support and potentially test 925.21. On the other hand, a move above 935.21 will favour the buyers to be in control, with the next resistance likely to be at 938.54. Furthermore, a break past that level will invalidate the downside narrative and favour the bulls to test 945.65 in extension.