Platinum May Test 2012 Peak on Double Bottom: Technical Analysis

Platinum may climb 5 percent to a level near last year’s peak in the coming weeks, narrowing gold’s premium over the metal or even overtaking it, after forming a “double bottom,” according to Barclays Plc.

The price for immediate-delivery metal will reach $1,735 an ounce after confirming the first low of $1,529.19 on Oct. 29 and the second of $1,515.87 on Dec. 28, Dhiren Sarin, chief technical strategist for Asia Pacific at Barclays, said today. In 2012, platinum touched $1,737.25 on Feb. 29, the highest level since September 2011.

Platinum, used to make autocatalysts and jewelry, has advanced 11 percent in the past year, outperforming gold and silver, on increased demand from the auto industry and amid supply disruptions at mines. A double bottom is a chart pattern showing a drop in price, followed by a rebound and then another decline to near the same level, usually indicating support.

“As long as gold trades in a range-bound environment, platinum has room to outperform further from current levels,” Sarin said. Gold may trade in a range between $1,620, the two-thirds retracement level after a rally from May to October last year, and $1,725 an ounce in the short term, he said.

Spot platinum was little changed at $1,655.42 an ounce at 2:19 p.m. Tokyo time, while bullion climbed 0.2 percent to $1,671.25 an ounce. Gold’s premium over platinum was at the lowest level since April today.

In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

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