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Platinum prices rally on strong demand and South African Covid -19 vaccine concerns

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(Kitco News) - The gold market continues to struggle to find new bullish momentum, but investors are finding value in other precious metals as platinum prices continue their upward trend.

Analysts note that platinum is benefiting from shifting supply and demand dynamics as concerns grew that South Africa, the top producer of the precious metal, could see more supply disruptions as the nation continues to deal with vaccine issues against the COVID-19 pandemic.

Kitco News reported last week that the South African government said it would not administer the Oxford-AstraZeneca vaccine after a small clinical trial suggested that it isn't effective in preventing mild to moderate illness from the variant dominant in the country.

In further vaccine news, a laboratory study published Wednesday in the New England Journal of Medicine warned that the Pfizer-BionTech vaccine is less effective against the virus's South African strain.

According to an analyst at Societe Generale, a supply-crunch threat is creating strong bullish sentiment in the marketplace not see in years, with speculative long positioning reaching multi-year highs.

April platinum futures last traded at $1,272 an ounce, up more than 1% on the day.

In a report Thursday, analysts at ABN AMRO said they are increasing their forecast for the precious metal as they see platinum outperforming other assets. They said they are bullish on platinum as they see demand rising in the marketplace.

Strong jewelry demand out of China, renewed industrial demand, and an improving automotive sector are all factors that will continue to support platinum prices through 2021, said Georgette Boele, senior precious metals strategist for the Dutch Bank.

In her updated forecast, Boele sees platinum prices pushing above $1,300 an ounce in the fourth quarter and averaging the year around $1,225 an ounce.

"We continue to expect strong industrial demand and demand for platinum for car converters. Moreover, platinum prices may not be as low as they were, but they are still relatively cheap compared to other precious metals," she said in the report.

Looking at platinum's technical picture, Karen Jones, market analyst at Commerzbank, said that while the precious metal is in an uptrend, it could see some consolidation in the near-term.

"While prices are above the 55-day moving average, we will assume an upside bias to re-try the topside," she said.

She noted that the platinum's massive spike to $1,348 at the start of the week appears to be an "exhausted blowoff."

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