Gold vs. Industrial Metals: A Recession Signal?

The divergence between Gold and industrial metals has reached striking levels in 2025, with gold surging over 40% year-to-date while copper, aluminum, and zinc decline nearly 10%. This decoupling mirrors patterns seen before past economic downturns, raising alarms among investors.

Gold's breakout above key technical resistance—trading firmly above its 200-day moving average—echoes pre-recession behavior observed in 2018 and early 2020. Meanwhile, industrial metals languish amid weak Chinese demand and slowing global infrastructure spending, with copper's struggles particularly notable given its traditional role as an economic bellwether.

Central bank demand remains a powerful driver for gold, with over 1,000 tons purchased globally this year amid de-dollarization trends and geopolitical hedging. Sticky inflation across developed and emerging markets further bolsters the case for hard assets, while a weakening U.S. dollar adds upward pressure.