A tale of two metals Gold and Copper Part II

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.

Copper

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.

Source Tradingview. The figures stated areas of February 15th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. 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 or sale of any currency or CFD contract. 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. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. 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.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.