Daijiworld Media Network - Mumbai

Mumbai, Oct 31: In a rare market phenomenon, the copper-to-gold price ratio has plunged to its lowest level in five decades, trading more than two standard deviations below its long-term historical mean. The sharp divergence has prompted global financial firm Jefferies to suggest that a correction — or “mean reversion” — is inevitable, with copper likely to lead the recovery.

According to Jefferies, the current ratio highlights a major undervaluation of copper when priced against gold, signaling a potential long-term buying opportunity for investors in the red metal.

The copper-gold ratio has long been regarded as a key barometer of global economic health — with copper prices typically rising during periods of industrial strength and gold thriving in times of uncertainty. The present imbalance, experts say, underscores an unusual global backdrop where gold’s safe-haven appeal has outpaced industrial optimism.

Analysts attribute the ratio’s slump largely to the sustained surge in gold prices, driven by elevated geopolitical tensions, fiscal concerns in the United States, and aggressive gold purchases by global central banks. Gold’s value has soared over 50% this year, fueled by its reputation as a hedge against inflation and currency depreciation.

In contrast, copper prices have struggled amid lingering concerns over global manufacturing demand and slowing growth in China — the world’s largest consumer of industrial metals.

Jefferies believes that the forces pushing the ratio to such historic lows cannot persist indefinitely. As industrial activity revives and the global economy stabilizes, copper demand is expected to rebound, especially given its essential role in the green energy transition and infrastructure development.

Market watchers see the current phase as a critical turning point, with copper poised to regain ground against gold — potentially signaling renewed optimism for global growth in the months ahead.