Platinum and Gold by Scott Wright. Infromative and insightful.

Platinum closed at another new high for the month of July at $1576.80. There isn’t much fundamental oomph to this rally though. It seems purely technical in nature. With a tepid day in the S&P and a reassuring $14 technical bounce in gold, it’s copper that is roaring ahead of the pack with another high for it’s recent upward move.

Oct platinum $1,576.80, up $13.40; Range $1,554.00-$1,579.00

Sep palladium $500.00, up $8.80; Range $485.00-$500.95

Dec gold $1,183.90, up $12.70; Range $1,168.00-$1,185.80

Sep silver $18.003, up 38.6 cents; Range $17.530-$18.125

Did I say the rally is over? Platinum made it’s highest close since June today at $1563.40. It seems to be feeding off of industrial demand led by copper which made it’s highest close since May 13 at $3.2900 today. The other leading markets were droopy and lackluster; the S&P down, gold holding its own but still looking for support.

Platinum has to use the $1550 level as support, not just a pivot zone, to sustain this anemic rally. Whatever happens short term platinum is still range bound between the May 21 low of $1473.00 and the June 21 high of $1617.80. Wake me when it gets to $1600.

Oct platinum $1,563.40, up $21.70; Range $1,540.70-%1,568.60

Sep palladium $491.20, up $22.45; Range $469.00-$492.75

Dec gold $1,171.20, up $8.80; Range $1,161.60-$1,172.00

Sep silver $17.617, up 17.6 cents; Range $17.480-$17.695

It looks like the technical downward break is finally here in the gold market with some technical follow through in platinum. After making a new high for the move platinum closed right back below it’s $1540 resistance at $1536.70. It basically means the rally is over.

Is platinum going to follow gold or the S&P? Jewelry fabricators (the gold crowd) usually can afford to stockpile while automotive catalyst demand (the S&P followers) use just-in-time pay as you go inventory systems. So there is a bit of a push-me-pull-you effect there.

Peter Duncan of Johnson Matthey says stockpiles are full while demand should continue to be strong.

"The biggest market by far for platinum jewellery is China - although demand has fallen off a bit this year - that's hardly surprising because we saw a large period of stock building in the first half of 2009 which is unlikely to be repeated. But the underlying demand in China is still very strong, and almost irrespective of price, we see that that has a long way to go before it approaches any ceiling," he says.

Johnson Matthey has a vested interest in creating the perception of a strong platinum market, meaning higher prices. So a pinch of salt is required. On the other hand they are in the business so they should know.

If gold continues to fall platinum should follow.

Oct platinum $1,536.70, down $19.10; Range $1,534.00-$1,565.90

Sep palladium $466.55, down $8.45; Range $465.90-$481.50

Aug gold $1,158.00, down $25.10; Range $1,156.90-$1,186.50

Sep silver $17.626, down 57.4 cents; Range $17.580-$18.235

With the enthusiasm shown in the stock market recently it isn’t surprising that October platinum closed above a three week consolidation zone at $1542.80. What’s surprising is that it isn’t higher. With copper closing well above $3.00 at $3.1850 a pound platinum should head for at least $1550 and possibly the June 18 high of $1617.80.

But platinum is a secondary market that has to be lead by the stock market, copper, gold and general economic sentiment. With continued Euro zone improvement we could well see higher platinum prices. Even so $1600 is still a long way off if this is the best the bulls can do alongside a sustained rally in the S&P.

Oct platinum $1,542.80, up $13.40; Range $1,525.20-$1,551.80

Sep palladium $466.75, up $9.85; Range $458.80-$470.00

Aug gold $1,187.80, down $7.80; Range $1,185.80-$1,203.90

Sep silver $18.101, down 1.9 cents; Range $18.060-$18.280

An article from the U.K. says Platinum could be a better investment than gold. I’ve been preaching that there could be the kind of buying opportunity in platinum that presents itself once every ten years or so.

Oct platinum $1,513.10, up $1.00; Range $1,499.30-$1,522.00

Sep palladium $443.90.00, down $4.70; Range $439.55-$456.70

Aug gold $1,181.90, down $6.30; Range $1,176.90-$1,194.70

Sep silver $17.543, down 24.5 cents; Range $17.440-$17.920

The S&P goes up and platinum stays the same. The S&P goes down and platinum goes down. There seems to be pretty stiff resistance in platinum at $1539. The deflation whisperings are getting louder. The whole month of July has been range bound between $1490 and $1540. If gold gets smacked down in a serious way, say below $1170 to $1150, it would be bombs away in platinum, also serious. We’re looking for a downside breakout in platinum not just below $1490, but hundreds of dollars per ounce, possibly to $1100.

But the relevant markets have to lead the way for platinum to follow. The stock market, gold, silver, copper, all have to deflate in tandem. Only gold has benefited from inflation fears, making new highs by the month. When deflation takes hold everyone will know it. It has already today. Don’t buy platinum just yet. Wait for prices to come down considerably.

Oct platinum $1,512.10, down $21.60; Range $1,506.10-$1,538.00

Sep palladium $448.60, down $18.60; Range $445.65-$469.30

Aug gold $1,188.20, down $20.10; Range $1,185.80-$1,210.90

Sep silver $17.788, down 57.4 cents; Range $17.730-$18.390

The past five sessions have seen notable gains in the S&P 500 index without, so far, significant follow through in Platinum. The copper market is also lackluster. If economic optimism continues we would look for platinum to return to the middle of the last two month’s trading range at the $1550 level.

Oct platinum $1,535.40, up $20.10; Range $1,510.00-$1,538.80

Sep palladium $469.15, up $15; Range $453.40-$470.50

The past four sessions on the platinum chart form a downward smash from $1596 to today's low of $1495.10 to close at $1506.80 down $30.50 on the day. Along side of pronounced technical damage to the S&P we can look for lower commodity prices, especially industrial metals.

Copper has been having real trouble holding on to the $3.00 mark. It closed today at $2.8800 down .0735. It looks like September copper will break support at $2.85 and then $2.75. If there is any demand out there it has to start showing itself or the industrial metals are toast. Burnt toast. If the stock market doesn’t turn around there will be real horrifying selling pressure, the type that will convince everyone that the recession is here to stay.

How low can platinum go? If the October contract consistently trades below last May’s low at $1473, the last bastion for the bulls, it would be critical. With follow through selling in gold we would look for support in platinum at $1100.

Oct platinum $1,506.80, down $30.50; Range $1,495.10-$1,540.00
Sep palladium $429.05, down $15.35; Range $424.00-$445.45
Aug gold $1,206.70, down $39.20; Range $1,198.40-$1,244.80
Sep silver $17.790, down 91.8 cents; Range $17.735-$18.690