Gold/Copper Ratio Indicates Market Is Risky Amid Global Economic Environment

Gold/Copper Ratio Indicates Market Is Risky Amid Global Economic Environment

March 3, 2023 0 By Wiley McDermott

According to market experts, there was an anticipated increase in prices that would likely extend from the fourth quarter of 2022 until at least the first quarter of 2023.

Since last summer, the Gold/Copper ratio has been on a downward trend, but it remains technically unharmed.

As far as the commodity market is concerned, over the past few years, the market has been led by copper and also by those companies that mine copper.

But, despite all the previous boom in the global commodities market and throughout the uptrends of gold, the Gold/Copper ratio has consistently decreased.

But some other commodities have seen a surge in their price in recent times.

What Do Bigger Picture Points At?

On the other hand, if we look at the bigger picture, the bigger picture indicates that there has been a rapid rise in the Gold/Copper ratio. This was during the time of the Covid-19 pandemic.

But the ratio rapidly moved downward by the end of 2021. The year 2022 saw a rebound that bridged a gap, even when viewed on a monthly ratio chart.

This was because emotional turning points are significant in financial markets, and emotions tend to be addressed sooner or later.

Moreover, it can also be argued that the Gold/Copper ratio’s rebound in 2022 can be logically attributed to the decline in inflation trades.

But as of this writing, the market is once more heading in a similar direction where all the price pressure is back on copper.

However, investing in gold is highly lucrative at the moment.

Experts argued that if the ratio of Gold to Copper increases again, it would have a counter-inflationary and counter-cyclical effect.

As the result, the prices will further shrink in the global commodities marketplace.

But it is also a fact that the Q4-Q1 rally has been influenced by additional indicators of upward trends.

However, over the past several weeks the Gold/Copper ratio has not seen even a single bullish trend to spike its ratio in an upward direction.

As The Things Stand Uncertainty Only Grow Stronger

Currently, the markets seem confused between risk and reward. As the things stand there is uncertainty that which commodity will go further down.

But market experts do believe that after the Covid-19 pandemic in 2020, gold has become the least risky commodity in terms of investment.

As compared to gold prices before the Covid-19 time period, gold was a much risker investment.

As gold has emerged as the best commodity to invest in right now, the price of copper is expected to go further down.

As the things stand, the current situation is likely to have negative outcomes for those sectors which are sensitive to macroeconomic data, inflation, and positive economic conditions.

But those industries that only rely on its technical indicators seem to stay unbothered by the current Gold/Copper ratio and how it plays out in the future.

Moreover, gold-backing stocks and stocks of those companies that are directly or indirectly involved in the extraction of Gold can also see a significant rise in their price.

As far as the price of Gold is concerned, the price of the yellow metal reached a level that was higher than it had been for over a week.

As the trade closed by the end of Thursday, U.S. Dollar saw a decline in its price momentum, as the result, the weak dollar positively impacted the yellow metal.

On the flip side, the price of copper has also seen a bit of stability amid the rumors that China will soon operate at its peak efficiency.

Talking of the various gold markets, the Spot gold market remained steady as gold was priced at $1,837.38 an ounce.

Furthermore, gold futures were flat as it was valued at around $1843.75 per ounce.

It seems that the only good news so far for Copper right now is that Chinese’ authorities importing tons of copper to support its industrial needs.