Platinum And Palladium Shine But Pose Risky Bet

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Platinum and palladium rallied Tuesday on news of a Johnson Matthey report citing supply shortfalls for the metals and of violence erupting during a strike at an Anglo American Platinum mine in South Africa.

Spot palladium prices surged 4.28% to $639 an ounce.

Spot platinum rose 1.02% to $1,589 an ounce.

ETFS Physical Palladium Shares ( PALL ) vaulted 4.6% to 62.58. But it's trading below both its 50- and 200-day moving averages, which is bearish. It has a weak IBD Relative Strength Rating of 60 and Accumulation-Distribution Rating of C. That shows it's outpacing 60% of the market, and institutional buying and selling are even.

UBS E-TRACS Long Platinum Tracking ETN ( PTM ) climbed 2.20% to 19.07. It regained its 50- and 200-day moving averages, which is bullish. It has a strong 79 RS Rating but a weak Acc-Dis Rating of D-.

Johnson Matthey's Platinum 2012 Interim Review forecasts a platinum shortage of 400,000 ounces this year after running a 430,000 surplus in 2011, Kitco.com reported. South Africa -- which accounts for three-fourths of global supply -- saw supplies fall to their lowest level since 2001. Johnson Matthey sees a palladium shortage of 915,000 ounces, in contrast to a 1.255 million surplus last year.

Analysts believe the price surges are just a knee-jerk reaction to the day's news.

"The global economy is not expanding enough to warrant concern for these particular metals and the products they service," said Terry Sacka, chief strategist at Cornerstone Asset Metals in Palm Beach Gardens, Fla.

He projects platinum could rise to $1,800 an ounce and correct to $1,500 an ounce, while palladium could rise to $700 an ounce and correct to $580 an ounce.

"I would not expect them to go much higher, unless the global economy picked up," Sacka said.

Standard Bank, based in New Zealand, forecast a platinum shortage of 355,000 ounces and a palladium shortage of 940,000 ounces. But the market already knew this and has priced that in, says Marc Ground, an analyst with Standard Bank.

"This price jump is overdone as markets have most likely already discounted these deficits a while back and above-ground stock remains significant," Ground wrote in a daily commodities report.

Other Precious Metals

Meanwhile, silver and gold prices were mixed.

Spot gold shed 0.23% to $1,725.90 an ounce.

SPDR Gold Shares ( GLD ), tracking a 10th of an ounce of bullion, fell 0.21% to 167.10 a share. It's consolidating below its 50-day moving average. It's corrected only 4% from its 52-week high, which is a normal pullback in an uptrend.

Market Vectors Gold Miners ETF ( GDX ) dropped 1.12% to 49.48. It's also consolidating below its 50-day line.

Spot silver ticked up 0.25% to $32.60 an ounce.

IShares Silver Trust ( SLV ) added 0.10% to 31.40. It appears to be trading in a sideways range below its 50-day line. It rebounded off of price support at its 200-day moving average and so its uptrend remains intact.

PowerShares DB U.S. Dollar Index Bullish (UUP), measuring the dollar against a basket of global currencies, picked up 0.09% to 22.21 -- a two-month high.

Follow Trang Ho on Twitter @TrangHo ETFs



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs

Referenced Stocks: GDX , GLD , PALL , PTM , SLV

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