In today's market activity, the LME copper 03 contract surged to $14,617 per tonne, surpassing January's peak of $14,527 and setting a new all-time high. This marks a remarkable turnaround from March 2020, when London copper had fallen to a cyclical low of $4,371, before embarking on a sustained six-year bull run that has now delivered cumulative gains of 234.4% — more than tripling in value.

The primary driver behind copper's relentless ascent is a fundamental supply-demand imbalance: supply-side growth is becoming increasingly difficult, while demand-side expansion continues to accelerate at a rapid clip. Chile and Peru, the main exporting nations for copper ore, are witnessing the gradual depletion of their shallow, high-grade oxide deposits, while sulfide ores require significantly higher costs and more complex processing techniques. Furthermore, operational challenges plague companies across South America, with production halts frequently stemming from management deficiencies. Each time a stoppage is announced, it provides a short-term boost to copper prices.

On the demand side, copper consumption keeps expanding across multiple fronts. Whether it's the essential power batteries for new energy vehicles, the photovoltaic industry, or the entire electricity transmission system, all rely on copper as the conductive medium. We currently find ourselves in an intermediate phase between fossil fuels and nuclear energy, with various forms of electricity generation — solar, hydro, and wind — along with electricity utilization, experiencing explosive growth. Given this long-term structural transformation, copper demand is unlikely to experience a significant decline in the near term, and prices retain solid fundamental support.

While copper prices have been charging ahead, gold has been struggling to mount a recovery following a sharp decline. Since 2020, both gold and copper have been in long-term bull markets, so why have they begun to diverge this year? And in the future, which asset will regress toward which? We believe the answer lies in their fundamentally different natures. When macroeconomic conditions shift, it makes perfect sense for one to rise while the other falls.

Copper is fundamentally an industrial metal, and when the industrial chain is expanding, price increases rest on a solid supply-demand foundation. Gold, by contrast, serves primarily as a safe-haven asset. It only demonstrates strong appreciation potential when the global economy enters recession, geopolitical issues become frequent, or the dollar's status as an international payment currency is threatened.

Since the outbreak of the Middle East conflict between the US and Iran, international oil prices have surged and remained at relatively elevated levels, fueling strong inflation expectations among major developed countries led by the United States. Facing potentially uncontrolled price levels, the European Central Bank has already raised interest rates twice. Although the Federal Reserve has not yet implemented rate hikes, the expectation of future increases has driven the yield on 10-year US Treasuries substantially higher. Interest rate hikes represent the biggest headwind for gold's rally, which directly explains why gold began to tumble after April 2026, diverging completely from copper's upward trajectory.

Despite gold's weak short-to-medium-term performance, we maintain that the dollar's hegemonic position in international markets is eroding, and gold still possesses a foundation for a long-term bull market. While the Fed may raise rates within the next six months, these cyclical policy moves are unlikely to overturn gold's long-cycle upward logic. Conversely, for copper, although it is currently benefiting from the supply-demand imbalance and surging higher, in the long run, demand will eventually enter a stable phase while supply continues to catch up. Once supply and demand reach equilibrium, copper prices could experience a sharp correction — though it bears noting that this scenario has a low probability of occurring in the short to medium term.

Market risk warning: Investing carries risk, and caution is required. The above content represents only the analyst's personal views and does not constitute any trading advice. This report should not be treated as the sole reference source. Analyst opinions may change over different periods, and updates will not be issued separately.