Gold Retreats as Risk Appetite Improves, Copper Extends Recovery

Commodities diverged this week as investors rotated away from safety and into growth linked assets. Gold slipped to $4,000/oz, pressured by stronger equities and reduced geopolitical tension, while copper climbed above $5.14/lb, boosted by renewed optimism around Chinese stimulus and improving global trade sentiment.

What’s Moving Markets

Risk shift: Investors continue to unwind safe haven trades as stock markets hit multi-month highs. The appetite for riskier assets, such as industrial metals and equities, reflects growing confidence that global growth could stabilize into year-end. This move has drained demand from gold and silver, traditionally used as hedges during volatility.

China focus: Reports from Beijing suggest the government is preparing a fresh infrastructure and renewable energy package aimed at supporting construction and manufacturing sectors. Copper and iron ore futures rallied on expectations of stronger demand for electrical grids, transportation networks, and clean tech expansion sectors that are metal intensive.

Dollar effect: Despite lower inflation expectations, the U.S. dollar remains firm, capping gold’s potential rebound. A resilient greenback typically pressures dollar denominated commodities, and traders say any upside for precious metals will likely depend on weaker U.S. data or a dovish Fed tone.

“Gold is losing its momentum as investors rotate toward cyclical assets,” said Saxo Bank’s Ole Hansen. “But any surprise Fed hawkishness or sudden risk off shift could quickly revive defensive demand.”

Market Dynamics

The rotation has also spilled into the broader commodity complex. Oil prices remain range bound near $78/barrel, reflecting stable demand but cautious positioning ahead of key OPEC+ meetings.

Meanwhile, agricultural commodities are mixed wheat futures declined on improved harvest forecasts, while cocoa and coffee extended gains due to adverse weather in West Africa.

Commodities are delivering mixed signals: optimism for industrial and growth metals, hesitation across traditional safe havens. The market’s next direction hinges on the global risk mood if optimism about trade and China’s recovery holds, cyclical assets could keep outperforming.

But if macro uncertainty or central bank tightening returns, expect gold and other defensive plays to make a swift comeback.