rebound

Precious metals have been strongly demanded during the last few months: gold prices jumped above $1,000, silver and palladium prices reached recently a new 12-month high.

What about platinum? Have a look at the chart: the medium-term bullish trend in place since last November may above soon. A correction is expected.

Indeed, 11 months of up-trend have driven platinum price to a technical resistance that is likely to prevent a further rise. The historical high price (point A on the chart) posted in early March 2008 at $2,308 was followed by several months of correction and consolidation. The real plunge started at mid-July last year. In just 3 months, platinum prices fell from $2,059 to $752 (point B, down 63%).

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This currency pair has been falling down for the last 6 weeks and may reach soon the low levels posted in late 2008 and early 2009, when 1 US Dollar was exchanged against “only” 87.10 Japanese Yen. The current rate is around 89.60. A further decline by 2.80% would drive the pair to the support level of 87.10.

On the weekly chart, the bearish trend triggered in June 2007, more than 2 years ago, remains in place. The long-term descending resistance line (in red) starts from the high point of June 2007 (point A, at 124.16) and goes through the lower highs of August 2008 (point B, around 110.60) and the recent peak of last month (point C, at 97.72). The weekly MACD triggered a bearish signal in early July this year and argues for a continuation of the negative trend.

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This soft commodity has suffered strongly last year when the crisis pulled metals, energy and agricultural prices back to low levels. After a rebound this year, wheat price action has plunged once again. And now it is about to reach a long-term support that is likely to generate another rebound.

Let’s see this in details. First, have a look at the weekly chart. It gives an immediate and clear snapshot of what the price action has been doing for the last few years. You probably remember that the boom of many commodities occurred in the second half of 2006. This is what happened with Wheat, as the price took off from $3.60 per bushel in August 2006 to a historical high price of $13.49 in February 2008, only 18 months later. That was a 274% rise (point D on the chart).

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Gold prices have been rising firmly during those past 10 days, and so did Silver prices as well. And as Gold bulls should struggle to clear the immediate resistance around $1,000, Silver bulls are likely to be capped by the level of $16.50. It is actually the resistance level where the price closed yesterday.

In intraday session, a spike drove the price to a high of $16.86. As often, this resistance is an horizontal line that corresponds to a previous support line. This support level was valid during three months last year, between April and June (see the blue rectangle on the chart).

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