Platinum Hits 7-Year Low as Volatility Rises

Gold Is on a Winning Streak as Global Markets Slump

(Continued from Prior Part)

Multiyear lows

Platinum and palladium prices have been weak since the start of the new year, losing 8% and 10.6%, respectively, in January so far. Platinum and palladium prices closed at $819.5 and $499 per ounce, respectively, on January 21, 2016. During the past five trading days, platinum has been the worst-performing precious metal with a loss 1.5%, as the rest of the three precious metals gained. Gold, silver, and palladium rose 2.5%, 2.5%, and 2.3%, respectively, during the same timeframe. Platinum is down to its seven-year low mainly due to the weakness in the market.

Below is a comparative price chart of the Physical Platinum Shares ETF (PPLT) and the Physical Palladium Shares ETF (PALL), which show the movement of the two metals.

Volatility bounces

The overall volatility in platinum has also been on the rise. On Wednesday, January 20, the implied volatility in platinum stood at almost 24% compared to the 22% during the last trading week. The current trading price of $819.5 is at a 10.7% discount from its 100-day moving average price of $918. Palladium is also trading at a whopping 15.9% from its 100-day moving average price of $593 per ounce.

Further ups and downs in the economic outlook can negatively impact platinum and palladium. Unlike these metals, gold and silver are considered safe-haven assets that may benefit from volatility. Mining companies like Sibanye Gold (SBGL), AngloGold Ashanti (AU), and Gold Fields (GFI) may be positively impacted by a rise in gold and silver.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Gold ETFs Rose on Increasing Gold Prices

• Part 2 - Gold Is on a Winning Streak as Global Markets Slump

• Part 3 - 12-Year Lows for Oil Lifted Up Gold