Copper prices have once again exceeded US$10,000 a ton, or US$4.68 per pound, and at least one analyst thinks the metal’s ratio to the gold price could indicate a continuation of the recent rally in US stocks.
“This is significant, the copper price is often considered a proxy for global growth, and it has only ever breached this level a handful of times, most recently in March,” XTB research director Kathleen Brooks wrote in note to clients.
One of the key price drivers, she said, has been supply constraints, as the industry is facing mounting challenges including deeper mining operations, falling ore grades, and rising costs.
As well, demand has also been surging due to the transition to cleaner energy and AI demand for electricity, in which copper serves as an excellent conductor, she noted.
The analyst also pointed to the record low ratio between the copper and gold price, calling copper the “new gold” and stating that it could be copper’s turn to play catch-up as the red metal has been an important component of the AI trade.
She noted that the S&P 500 has historically had an inverse correlation to the copper/gold ratio, and the rally in US stocks could be well placed to continue.