The copper-gold ratio moves away from historical lows, potentially supporting mining stocks.
- Citi points out that the copper-to-gold ratio is rebounding from the historic low seen in March. The ratio dropped to 2.5 in March but has now bounced back to around 3.25, mainly driven by a significant decline in gold prices, while copper prices have mostly remained within a range.
- Although the ratio is still well below the long-term average of 5.7, Citi believes that its upward trend is a positive signal for mining stocks. The STOXX Europe 600 Basic Resources Index, which covers diversified miners as well as precious metals and copper miners, has fallen about 14% since reaching a record high on June 2.
- Citi analyst Ravi said that historically, there is a very strong positive correlation between the copper-to-gold ratio and the performance of mining stocks.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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