The metals market has been particularly active this week. Gold has reached new highs, hitting $3,674 per ounce, supported by central bank accumulation, notably by China, and by expectations of interest rate cuts from the Fed. At the same time, industrial metals, such as copper, are also on an upward trajectory: copper reached its highest level in over five months at $10,068 per ton on the London Metal Exchange, driven by hopes for U.S. rate cuts and supply disruption concerns in Indonesia and Peru.
Current Economic Environment
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Gold: As a safe-haven asset, it benefits from central bank diversification of reserves and expectations of lower U.S. interest rates, increasing its appeal as a hedging instrument.
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Copper: A key industrial metal for the energy transition and infrastructure, it is sensitive to global growth prospects and supply tensions from major producers.
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Supporting factors: Accommodative U.S. monetary policy and structural demand for both industrial and precious metals underpin the current bullish momentum.
Investment Recommendation
Investing in precious and industrial metals can provide a balanced profile between safety and growth potential.
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Why?
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Gold: Offers protection against inflation and macroeconomic uncertainty, supported by central bank purchases.
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Copper: Benefits from structural demand for the energy transition and supply risks, providing upward potential.
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Diversifying between precious and industrial metals allows investors to benefit from both safe-haven and cyclical industrial trends.
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Key message: Metals offer an attractive combination of security (gold) and growth (copper), with prospects supported by monetary policy and industrial demand.
Risk Scenario
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Price volatility: Metals remain sensitive to macroeconomic announcements and Fed decisions.
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Overvaluation risk: Gold reaching historic highs may limit short-term gains.
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Supply disruptions: For copper, strikes, natural disasters, or export restrictions can trigger sharp price swings.
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Economic slowdown: A contraction in global industrial demand could weigh on industrial metals.
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Geopolitical factors: International tensions or sanctions may impact access to commodities and influence prices.