By Glenys Sim
May 7 (Bloomberg) -- Platinum may decline toward $800 an ounce, reversing this year’s 23 percent gain, as the metal slumps into a “bear trend,” Standard Chartered Bank forecast, citing trading patterns.
“Spot platinum is resuming the bear trend, with trendline support giving way and a slide below $1,002 and $999 to build,” David Barclay, the bank’s commodity strategist, wrote in a report yesterday. “A break down towards $800 should follow.”
So-called trendlines, used to determine momentum, are found by connecting an asset’s high prices over a period, and its lower prices to form a channel. Technical analysis is founded on the assumption that an asset’s past trading patterns may be used to predict future moves.
Platinum for immediate delivery rose as much as 0.8 percent to $1,148.50 an ounce, and was at $1,147 at 8:40 a.m. Singapore time. The metal hasn’t traded at $800 an ounce since Dec. 12, and last fell below $1,000 an ounce on Feb. 10.
Most of the metal’s so-called daily momentum indicators such as the 14-day relative strength index and the stochastic oscillator are bearish, London-based Barclay wrote. The 50-week momentum oscillator is also starting to turn lower after nearly reaching zero, and should add “bear pressure,” he wrote.
The 250-day moving average of $1,266.99 is “looming above” the 20-day and 60-day moving averages, which highlights the potential for declines, the report said. “The break down in the spot metal price is consistent with the long term trend -- down,” wrote Barclay.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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