economy
Copper Joins Gold in Broad Commodities Sell-off. There's a Worrying Reason Behind It
After major rallies, metals were under pressure on Thursday as rising oil prices increased both inflation and growth worries.
TL;DR
- Prices for gold, silver, copper, and palladium fell sharply on Thursday.
- Rising oil prices due to the U.S.-Iran war are a primary concern, fueling fears of inflation and higher interest rates.
- Higher interest rates weaken the appeal of non-yielding assets like gold.
- A stronger dollar, resulting from higher rates, also weighs on gold prices.
- Declines in industrial metals like copper are often seen as indicators of slowing economic growth.
- Investors are discussing the 'demand destruction' phase of an energy shock and recession risks.
- Some analysts believe stagflation is unlikely, citing past events where oil shocks did not lead to sustained stagflation or recession.
- Gold is viewed as a potential hedge against rising national debts and deficits, and also as a play in a stagflationary environment.