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Copper/Gold Ratio Says Bond Yields Rally Overdone

Published 10/26/2022, 04:51 PM
Updated 07/09/2023, 06:31 AM

The copper/gold ratio has followed 10-Year U.S. Treasury bond yields (in trend) fairly closely.

This correlation has been one that I’ve followed to see if bond yields are changing their trend or if the trend has become overdone.

Today, this trend is on our radar as inflation is a major nemesis, and the Federal Reserve is raising interest rates very quickly. This has spurred a fast rally in 10-year yields.

Copper/Gold Ratio Weekly Chart

Below is a long-term chart highlighting the Copper/Gold ratio versus the 10-year treasury bond yield. As you can see, the two tend to follow each other in trend. The spread between the two is its widest in a couple of decades right now, with the 10-year bond surging higher.

Is it time for the spread to narrow? Seems likely.

If not, this would suggest some credit quality issues in U.S. Government bond paper, which would be another concern. Keep an eye on this, and stay tuned.

Latest comments

then gold needs to fall or copper up or the yields down. fed wants rates above 4% like a week ago so idk.
Good one...
Great analysis, thanks
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