Platinum price: Short-term headwinds offset structural tightness

Platinum price is on track to record its sixth consecutive week of losses amid macroeconomic headwinds. Despite the structurally tight market, a hawkish Federal Reserve and stronger US dollarare weighing on the precious and industrial metal. 

Platinum price reverses gains amid macroeconomic pressures

Early in the year, platinum price rallied to an all-time high as investment demand fueled the bullish momentum into the new year.  It has since declined by about 40% as investors struggle to find a balance between the conflict-driven uncertainties and the steady long-term outlook.

Notably, the US-Iran war and subsequent surge in inflation concerns have been weighing on platinum price while bolstering the US dollar. As a result, the metal’s price movements have been shaped by lower highs and lower lows in recent months.

A stronger US dollar remains a major headwind for the asset even as the market remains structurally tight. At the time of writing, the dollar index was at a fresh 11-month high as investors digest the latest interest rate decision by the Federal Reserve. 

During Fed Chair Kevin Warsh’s first monetary policy decision, FOMC decided to leave interest rates unchanged at between 3.5% and 3.75%. This is in line with the central bank’s mandate to lower inflation, which remains elevated above its 2% target. A hawkish tone tends to weigh on the non-yielding precious metals while bolstering the US dollar. Besides, a stronger greenback makes the asset more expensive for buyers holding foreign currencies.

Meanwhile, the losses are set to be curbed by the structural tightness in the platinum market. Mining constraints and steady physical demand are offering some support amid the macroeconomic pressures. 

Platinum price technical analysis

Platinum price edged lower early on Thursday as the market digests the latest interest rate decision by the Federal Reserve. At the time of writing, the industrial and precious metal was trading at $1,737 after hitting an intraday high of $1,823 in the previous session.

A look at its daily chart signals continued volatility in the ensuing sessions as investors struggle to find a balance between the short-term headwinds and the steady long-term outlook. To begin with, platinum price is hovering around the support region of $1,730. 

At an RSI of 37, subtle losses may sustain the asset above the oversold territory while the possible rebound has the gains curbed around the neutral zone of 50. The thesis on curbed gains is further supported by its continued trading below the 25 and 50-day EMAs. 

Amid the expected volatility, the range between the support at $1,665 and the 25-day EMA at $1,840 is worth watching. A move below the months-long bearish channel at $1,635 would invalidate this cautious thesis and activate the lower support level of $1,600. On the upside, further rebounding may have the gains curbed along the resistance level of $1,880.