TD Securities hopes to end its bearish position in the precious metals market by announcing a tactical short position in platinum.
Daniel Ghali, a senior commodities strategist at the bank, released a report saying January futures traded at $998 an ounce, up 0.22% for the day.
In a note to clients, the bank said it is now selling platinum at $993.20 an ounce, expecting prices to fall to $850 an ounce over the next two months. Ghali said it is obvious that buying pressure in the precious metal is close to being exhausted.
"Conditions for a bull trap are forming in the market as multiple narratives ranging from an imminent reopening of China to hawkish central bank activity have catalyzed a massive short covering rally, exacerbated by CTA buying activity," he said. "The depletion of buyers is most prominent in the platinum market, with only minimal subsequent buying activity expected even in a bullish scenario. It is weighed down by the sluggish Chinese recovery, declining car sales, and the global economy heading into recession."
TD Securities sees long-term bullish potential for platinum, noting a likely rise to $1,100 by the end of 2023, and a climb to $1,200 by the end of 2024.