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Bloomberg
Gold and copper diverge as investors bet on recovery
(Bloomberg) – Gold is plunging as copper soars, with growing optimism that a vaccine will spur a global economic recovery from the pandemic. Copper rose to a seven-year high in London, while gold slipped under the $ 1,800 an ounce for the first time since. July, as the sell-off accelerated after liquidation, was pushed towards a key technical support level. Gold’s decline has accelerated the pace as investors continued to trade riskier assets looking to profit from any recovery from the pandemic.The divergence underlines how investors are moving further and further away from gold, which is considered a safe haven in times of economic stress, in favor of copper, seen as a benchmark for the global economy and an important part of the transition to low-carbon energy resources. Gold prices are heading towards a third weekly decline. Copper rallied for a fourth day as other industrial metals rose as global equities are on track for the best month on record with valuations close to their highest in around 20 years. “The optimism sparked by the positive vaccine news has had a particular impact on gold, which continues to collapse despite a weaker dollar,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. “It is now below the 200-day moving average, which could trigger more technical sales.” Bullion’s steep decline was in line with continued outflows of gold exchange-traded funds, which are now headed for their first monthly outflow this year. Funds have been a crucial support pillar for bullion in 2020, so their current erosion has significant implications for the price. China’s rapid economic recovery has taken its imports to record highs this year, helping to offset the lower demand in the rest of the world. The country’s latest factory indicator, expected on Monday, is expected to show that the activity of the main copper consumer will continue to expand. On Friday, data from the Shanghai Futures Exchange showed that copper stocks in its warehouses are dipped to a low since late 2014., which began earlier this month with Pfizer Inc.’s announcement, they saw the bullion on a downward path even though there are uncertainties around the strikes. United Donald Trump who will cede power if the Electoral College claims victory has also signaled that there will be a peaceful transfer to the new administration, although he has signaled that he may never formally admit defeat and may miss the inauguration of the Democrat. “Gold has entered the next ‘down-leg’ of its correction phase,” according to Quek Ser Leang, market strategist at United Overseas Bank Ltd. A break of the support zone between $ 1,760 and $ 1,780 would pave the way for further weakness towards $ 1,600, he said. Spot gold fell 1.6% to $ 1,786.01 an ounce at 11:27 am in New York. Silver fell 3%, while platinum and palladium advanced. Three-month delivery copper on the London Metal Exchange rose 1.4% to $ 7,502.50 a ton. The Bloomberg Dollar Spot Index fell 0.2%. For more articles like this, visit bloomberg.com Join now to stay on top of the most trusted business news source. © 2020 Bloomberg LP
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