Gold prices have soared to new all-time highs, topping $2,500 per ounce for the first time in history. This surge has been driven by expectations of lower interest rates and increased demand for safe-haven assets. On the other hand, base metals like copper have remained weak due to sluggish economic growth, particularly in China.
The recent strength in gold prices is attributed to central banks’ commitment to rate cuts and concerns about the global economy. The US housing starts data released on Friday, which showed a significant decline, has further reinforced expectations of rate cuts by the Federal Reserve. Similarly, both the UK and the US reported lower-than-expected inflation data for July, indicating a possible lower interest rate environment in major economies.
China, a key player in the copper market, has seen copper prices drop to a five-month low due to tepid economic data. However, a recent rebound in copper prices has occurred, driven by ongoing global market turmoil and a weakening US dollar. Despite this, sluggish demand in China’s property sector may continue to weigh on copper prices in the long term.
Looking ahead, copper is expected to remain in an uptrend as it is crucial for renewable energy, electric vehicles, and artificial intelligence technologies. S&P Global predicts that copper demand will double by 2035, with significant growth expected from the US, China, Europe, and India. This suggests that while gold prices surge, copper may also see opportunities for growth in the future.
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