The gold/copper ratio is rising, but this time the signal is different
For decades, the gold/copper price ratio has been a key benchmark for commodity traders and macro investors alike to gauge the balance between global growth sentiment and flight to safety. Typically, a persistently low ratio would coincide with a stable macroeconomic regime while sharp spikes above the long-term trend have been short-lived, but crisis-driven (e.g., the Global Financial Crisis (GFC) in 2008-09, Brexit surprise in 2016, and global pandemic in 2020).1
A common theme across those spikes was that copper prices were usually collapsing due to weaker industrial activity and risk-off flows while gold often benefitted from “safe haven” buying.
This time, copper is rising too
But 2023-2026 seems very different. The move in the gold/copper price ratio from below 0.25 in 4Q 2023 to near 0.40 in 1Q 2026 is historically strong but structurally slow. More importantly, copper has not been soft over this period. Prices for the red metal are up nearly 50% since the middle of 2023 on the back of increased capex for grid electrification, EV penetration, and AI data center buildouts. However, gold prices are up about 150% over the same timeframe.2 Indeed, this is not a story of plunging aggregate demand or global recession in recent years. The ratio is rising with both metals in a bullish uptrend.
A signal of monetary risk, not economic weakness
In prior cycles over the past quarter-century, rapid jumps in the gold/copper price ratio above the long-term trendline peaked within ~12 months and signaled fears about a slowdown in global growth and depressed economic activity. The multi-year upswing today might suggest a meaningful repricing of sovereign monetary risk and investor concerns about elevated global debt loads. In short, the rise in the gold/copper ratio seems to be a story about debasement risks as opposed to deflationary risks.
Record gold accumulation by central banks in the post-pandemic era (e.g. 2022-present) points to accelerating “alternative-fiat” demand amid questions about elevated US dollar exposure among reserve managers.3 Geopolitical fragmentation might be further exacerbating demand for monetary hedges, especially gold, in the current cycle. If the gold/copper price ratio breaks above 0.40 and continues to grind higher, it may even be analogous to the 1970s transatlantic economic exit of the Bretton Woods system, when spot bullion re-rated across the monetary order and entered a prolonged multi-year bullish phase.
Price paths for the yellow and red metal are uncertain. But current dynamics may point to a regime shift now unfolding—one investors should be watching closely.
Get more insights from our Gold Strategy Team.