Base metals show early signs of a recovery, Citi says
by Sara Sjolin
Gold has been hailed as the “new black” in 2016. But after the precious metal’s best start to a year since 1980, signs are emerging that a newfound love for base metals could overrun the gold rush, says Citigroup.
Gold GCJ6, -0.02% is up almost 20% this year so far, easily outperforming copper HGK6, +0.04% and aluminum as well as other asset classes, including equities. That’s largely because concerns over a serious economic slowdown in China and plummeting oil prices triggered a flight to safety away from riskier choices.
However, with global market jitters recently subsiding as indicated by the CBOE Volatility Index VIX, +5.39% below, it may be time to switch into the industrial metals, the Citi analysts said in a note on Monday. VIX is often referred to as the broader stock market’s “fear gauge.” It tracks option market demand for short-term stock protection.