Platinum price edged higher on Friday while remaining range-bound. The precious and industrial metal has been trading sideways for a week now as investors remain cautious of the developments of the US-Iran peace talks.
Trump’s assertions over the week have increased hopes of an MoU; lowering inflation concerns and global crude oil prices. This has in turn, eased the US dollar while bolstering platinum price. At the time of writing, the asset was trading at $1,963 an ounce.
Bulls in the platinum market are striving to break the resistance along the psychologically crucial zone of $2,000 an ounce after plunging below it over a week ago. Notably, the precious and industrial metal has been range-bound since the start of the US-Iran war amid opposing forces of high inflation and safe-haven demand.
On the one hand, investor demand bolstered platinum price as investors sought safety amid the geopolitical tensions. However, disruptions along the all-important Strait of Hormuz curbed these gains as financial markets braced for high inflation and increased interest rates.
In the new week, the market is reacting to the optimism over a US-Iran peace deal. Trump has indicated that a possible agreement between Tehran and Washington has been “largely negotiated” and that it will be announced soon. The proposal includes the reopening of the Strait of Hormuz, which has pushed Brent oil to a one-month low.
For the first time since early May, the benchmark of global oil has dropped below the triple-digit zone of $100 a barrel. This decline has eased inflation concerns while pulling the dollar index back below the support level of $99. The benchmark 10-year Treasury yields, which tend to move in tandem with the US dollar, also dropped to its lowest level in over a week. A weaker US dollar has bolstered platinum price by making the metal less expensive for buyers holding foreign currencies.
Even with the optimism, the investor sentiment remains cautious. Trump has stated that the blockade along the Strait of Hormuz will remain in effect until an agreement is certified and signed. On its end, Tehran has acknowledged that some progress has been reached in the peace talks, but maintains a deal “is not imminent”.
XPU price chart | Source: TradingView
Platinum price has been trading within a range since the start of the US-Iran war. The knee-jerk reaction to the US military attack on the Islamic Republic had the precious metal rally to a two-month high at $2,430. However, concerns of high inflation weighed on the asset; plunging it below the months-long bullish channel in mid-March. Since then, it has lacked enough momentum to rebound past this technical indicator. This has strengthened the resistance along $2,200.
On Monday, it edged higher after recording its second consecutive week of losses. Even so, it remains range-bound as the bulls lack enough momentum to break the resistance along the short-term 25-day EMA around $2,000. A look at its daily chart also shows that the metal is also trading below the medium-term 50-day EMA.
At an RSI of 46, platinum price may remain range-bound in the near term as the bulls strive for a breakout. As such, the range between the crucial support level of $1,913 and the 25-day EMA at $2,003 is worth watching. Further gains may activate the upper resistance zone of $2.060.
On the lower side, I expect the current support level of $1,913 to remain steady amid the strong safe-haven appeal. However, a pullback past that zone may have the sellers retesting the lower level of $1,873 before a rebound.