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.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj1fZS0Z-tAC5YdHH-e6KezeUFAyQPLuMZ5B_tdGAdhTVpg3kVZCJm_q-FedaIo64sledRxcceH_fz3KFEkKZk14wfjFxWzPhPAkw-kfetazhGtF7jaSNn5x5poLmB2l6gIAPsmCvY2qOw/s400/Gold+vs+Copper.png) |
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.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEit2YK-sMdZ9m5L3a8RyIn5DeYdQSvbQcGWEiJPLFvrOcM7UwICpWSdGm5X6u-X9Vj48KFX8SOSVcMgRD-SIISSEEM3yGpxGYfCzCRkaX1ytRdIPUs1hP5nnYRjpv6fU2bgE1e7GyX79lc/s320/Gold+copper+correlation.png) |
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