Overnight, spot gold reached a new record high, touching US$2,449.89 per ounce before slightly retreating to US$2,430 per ounce.
The current surge is driven by a combination of factors, including hotly anticipated US interest rate cuts, a new raft of economic stimulus measures in China and ongoing geopolitical tensions and the threat of war, which always make the safe-haven attractive.
The promise of lower interest rates enhances gold as an investment due to the reduced opportunity cost of holding non-interest-earning bullion.
Metals rally
The gold rush propelled other precious metals to new highs.
Platinum futures rose 0.2% to $1,096.50 an ounce, while silver futures surged 3.2% to a more-than-11-year high of $32.285 an ounce.
Simultaneously, copper prices on the London Metal Exchange (LME) have surpassed US$11,000 per tonne for the first time, fuelled by expectations of a supply shortage.
This marks the highest level ever for copper, extending a rally that has been ongoing for several months.
Copper's ascent
Investors have flocked to copper, anticipating that rising demand from sectors such as electric vehicles (EVs), renewable energy and artificial intelligence will offset weaker demand from traditional sectors like construction.
Futures on the LME surged over 4%, pushing copper past the US$11,000 per tonne mark before they stabilised in the afternoon.
The influx of investment has pressured bearish traders, particularly those cautious due to weak spot demand in China.
The bellwether metal’s good fortune since early April has bolstered confidence among copper investors, with tight supply and the prospect of production cuts by smelters driving speculative money into the market.
Despite the bullish sentiment, some market participants caution that copper prices are outpacing actual demand.
In China, inventory levels remain high and suppliers have reduced output. Nevertheless, the disconnect between physical demand and market prices persists as investors gravitate towards western exchanges.
Copper's rapid ascent has also brought a significant volume of bullish options into profitability, potentially fuelling further gains as dealers cover their exposure by purchasing futures.
By mid-afternoon on Monday in London, LME copper was up 2.2% to US$10,904 per tonne, after hitting an all-time peak of US$11,104.50 per tonne.
Prices have risen more than 25% since the start of the year, reflecting broad gains across major industrial metals.
The global rush to secure copper has been exacerbated by setbacks at major copper mines and the short squeeze on the Comex exchange in New York, which drove prices to a premium over the LME.
This has led to a diversion of copper to the US, tightening supplies in other regions and raising the prospect of inventory withdrawals in the Chinese market.