What is the copper-gold ratio?

The copper-gold ratio is calculated by dividing the price of copper by the price of gold. This simple ratio captures a powerful macro signal because the two metals are driven by fundamentally different forces. Copper demand is almost entirely industrial (construction, electronics, infrastructure, electric vehicles), making it a proxy for global economic activity. Gold demand is driven by safe-haven flows, inflation hedging, and central bank reserves, making it a proxy for risk aversion and monetary conditions.

When the ratio rises (copper outperforming gold), it signals that the market expects stronger economic growth, because industrial demand is driving copper higher relative to the safe-haven premium embedded in gold. When the ratio falls (gold outperforming copper), it signals deteriorating growth expectations, rising uncertainty, or flight to safety. This makes the ratio a useful cross-asset confirmation tool for macro views.

The copper-gold ratio has a well-documented correlation with US Treasury yields, particularly the 10-year yield. This correlation arises because both the ratio and bond yields respond to the same underlying macro variable: growth expectations. When growth expectations improve, both Treasury yields and the copper-gold ratio tend to rise. When growth expectations deteriorate, both fall. Former Fed Chair and prominent macro strategist Jeffrey Gundlach has cited this correlation as one of his preferred market signals.

For practitioners, the copper-gold ratio is useful as both a directional indicator and a divergence tool. If bond yields are rising but the copper-gold ratio is falling, it suggests that the yield increase is driven by supply factors (government deficit spending, term premium) rather than genuine growth optimism, a bearish divergence. Conversely, if yields are falling but the ratio is rising, it may signal that growth is stronger than the bond market reflects. The ratio is most informative at extremes and turning points rather than during trendless periods.