Gold is looking a better bet than copper in 2025, according to analysts at UBS, given risks to global growth, trade and investment.
Copper is the metal for a growing world economy and gold is the haven play, which UBS thinks will hold sway as the growth-inflation mix deteriorates.
Demand for copper, on the other hand, is likely to be dampened by concerns over the negative impact of tariffs on growth, especially in China, which accounts for over 50% of global copper demand.
“UBS China economists estimate the growth impact of tariff hikes to be around 150-175bp, with the potential for significant closing of businesses and loss of jobs.
“The negative impact could even be larger if broad tariff hikes are also imposed on other countries and tech/investment restrictions on China are tightened further.
“Amid weakness in China, we see the potential for copper to “catch down”, resulting in slower demand growth than previously thought or potentially even lead to declines.”
UBS also notes that copper is a late-cycle commodity, coming at the end of the house-building cycle so slowing completions could also mean further headwinds.
“More broadly, the strong growth in renewables has helped offset weakness in other segments, but this could also come under pressure given the scope for US renewables to fall.
“From a fundamental standpoint, we are constructive on copper long term, with demand likely to be boosted by the energy transition, while the mine supply pipeline looks challenging.
“But gold has the advantage of benefiting more from safe-haven flows and strategic portfolio diversification in an environment of persistent geopolitical risks and higher macro uncertainty.”