Tue, Sep 27, 2022 @ 03:45 GMT
HomeContributorsTechnical AnalysisA Tale of Two Metals Gold and Copper Part II

A Tale of Two Metals Gold and Copper Part II

In 2021 the key driver of gold was movements in real yields and the U.S. dollar. However, in late November, evidence emerged that this was no longer the case.

Despite a hawkish Fed shift that prompted the start of a sharp move higher in real yields and the U.S dollar, gold stubbornly refused to remain below $1800 for any meaningful length of time.

In 2022 the breakdown between gold and real yields intensified. In an article here

in early February, we noted the market was likely accumulating gold for a trifecta of excellent reasons.

“to protect against the debasement of fiat currency/inflation, equity market volatility, and European geopolitical tensions.”

An argument strengthened by Friday’s 1.76% rally in the gold price above $1860 on reports that Russia may invade Ukraine as early as this week.

The ability of gold to sustain and build on the break above downtrend resistance at $1845, coming from the 2020, $2075 high early this week, is a bullish development.

Providing gold does not retreat below support $1845/33 (daily closing basis), the expectation is for gold to extend gains towards $1950. Aware that news headlines around Russian/Ukraine tensions will play a role in what path it takes to travel there.


The price of copper rose sharply in the first half of 2021, with LME copper prices hitting a record $10,747.5/mt and Comex copper futures hitting $4.88 lb. However, since then, the copper price has traded sideways.

China’s regulatory reset last year, which caused deleveraging in the real estate sector in Q3, along with a higher U.S. dollar and prospects of a more aggressive Federal Reserve hiking cycle, currently overshadows record low copper inventories.

Following an easing of China monetary policy in December and as demand for copper is expected to grow as the world moves further along the clean energy cycle, the preference is to buy dips in copper towards the bottom of its range at $9,200/000 or $4.20/00 area. The profit target is a retest of 2021 range highs.

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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