The recent breakout in the price of gold above the four-year resistance level of $2,100 has captured the attention of investors and analysts alike. Many are attributing this surge to inflationary pressures and a general risk-off sentiment in the market. However, a deeper analysis reveals that there may be more to the story.
Taking a closer look at other metals like copper and steel, it becomes apparent that they are also experiencing breakouts, showing even more strength than gold. This suggests that the markets may be discounting future demand, indicative of continued global economic growth.
Copper, in particular, has seen a clear breakout above the early 2023 high of $4.35, with the 2022 highs of $5.00 now in sight. As an industrial metal crucial for infrastructure, transportation, and green energy projects, copper’s demand is on the rise. The ongoing economic recovery in China, along with disruptions in the global supply chain due to mine shutdowns, have further fueled the bullish outlook for copper.
Investors are closely watching the mining stocks as well, with the Global X Copper Miners ETF (COPX) outpacing the gains in the VanEck Gold Miners ETF (GDX). Todd Gordon, founder of Inside Edge Capital, LLC, sees potential in Southern Copper Corp (SCCO) and plans to increase their position upon a breakout in the bullish pattern.
While the market outlook remains uncertain, the bullish sentiment in the copper sector indicates a positive outlook for global economic growth and continued demand for industrial metals. Investors are advised to exercise caution and seek professional advice before making any financial decisions.
