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

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.