Platinum Market Update (February 21, 2013)

Platinum covered a lot of territory in January, with its low for the month coming in at $1,550 and its high at $1,702.

Although not to the same degree, the metal’s prices have also seen significant fluctuation in February, which began with platinum sitting at about $1,693 in New York. On February 4, prices intraday surged to $1,748.

On February 11, the market started seeing liquidation as some longs were apparently ready to cash out. But the following day, platinum got a boost on reports that Zimbabwe’s mines minister had announced the repossession of land from Zimplats Holdings (ASX:ZIM), a division of Impala Platinum Holdings (LSE:IPLA,OTC Pink:IMPUY). That reignited supply concerns, and Wednesday morning platinum was trading at $1,732. By the end of the week, prices had slipped to $1,677.

Platinum saw a small bounce earlier this week as union rivalry led to violence and approximately 13 people getting injured at Anglo American Platinum’s (OTC Pink:AGPPY) Siphumelele mine. Monday morning platinum was trading around the $1,697 level.

Prices have now fallen again. On February 20, morning prices were about $1,655. During the day, NYMEX platinum fell to around $1,637, the lowest level seen in five weeks.

Impala claims that Zimbabwean officials have not notified the company of the seizure actions reported by the media. That suggests that the action, at least for now, is having no impact on production. Anglo Americans’ crews have reportedly settled down and returned to work. Sentiment has been negatively affected by reports that European car sales fell nearly 9 percent year-on-year in January. And, further weighing on platinum, is the troubled gold market.

Given the momentum that has been seen in recent weeks, many analysts believe a correction is likely as the market appears overstretched. However, declines are not expected to persist long term, and the overall sentiment toward platinum remains bullish.