Today gold is behaving in a more traditional fashion, moving in the opposite direction from copper. With copper viewed as a "risk" asset and gold a "defensive" asset, the two should generally trade with a negative correlation.
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| Gold and copper futures (Source: Bloomberg) |
This is quite a contrast to the
recent price action, with gold trading more like an industrial metal, driving gold-to-copper correlation to its highs.
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| 120 day gold - copper correlation |
It's not at all clear if today's action indicates the beginning of a reversal in this trend. The decoupling of the two metals should make gold more attractive again as a "safe haven" investment, providing a real hedge to a risk portfolio (of equities and commodities).
SoberLook.com
