Gold slips overnight on fresh geopolitical hurdles while copper rises on resilient US data

Why are gold and copper diverging?

The Middle East conflict has now entered its third month, and the resulting swings in energy prices and risk sentiment (more lately around the ceasefire process) continue to drive sharp moves across many asset classes, including metals.

While precious metals like gold are feeling the pressure from higher energy prices, a stronger US dollar and rising yields, base metals - particularly copper - are responding to a very different set of drivers.

In this note, we look at the latest moves in gold and copper and what is driving the divergence.

Gold

Gold finished lower overnight at $4484 (-1.23%) as the US dollar strengthened on robust United States (US) economic data. The retreat was compounded by fresh hurdles in the US‑Iran ceasefire negotiations, which pushed oil prices higher and triggered a more hawkish shift in the US interest rates market.

After an extraordinary rally through the second half of 2025 that carried gold to an all‑time high of $5602, the metal has found the going much tougher of late. It has now declined for three consecutive months and recently touched a nine‑week low of $4366. At its current level near $4486, gold remains roughly 20% below its January record high and up just 4% for the year.

Gold's fortunes remain inextricably linked to the situation in the Middle East, which continues to act as the primary lever for energy prices, inflation expectations, the US dollar and Treasury yields.

On one hand, a formal extension of the US‑Iran ceasefire would, in theory, further remove some of the geopolitical safe‑haven bid that so effectively fuelled gold's pre‑conflict surge. Conversely, a deal would pave the way for lower oil prices and eased inflation fears, potentially leading to lower yields, a softer greenback and a dialling back of Federal Reserve (Fed) rate‑hike expectations – all of which are inherently gold‑supportive.

If a ceasefire agreement cannot be found and the conflict resumes, gold would likely extend its declines on risk‑aversion flows. This comes after the massive increase in participation by retail traders in the precious metal bull market, which during periods of risk aversion has seen it trade more like a risk asset than a traditional safe haven.

Gold technical analysis

We turned bullish on gold in early April after it reached the $4200 wave equality target, having held a bearish view for much of March following its rejection of resistance near $5419. After that point, gold hit a mid‑April high of $4891 before falling back to last week’s $4366 low.

Looking ahead, as long as gold remains above support near $4400, coming from the 200‑day moving average (MA) and above last week’s $4366 low, we remain constructive on the outlook for gold, looking for a rebound back to the $4900 - 5000 area. Conviction in this view would increase on a sustained break above trend line resistance at $4600.

A sustained break below support at $4400 - $4360 would warn of a retest and possible break of the March $4098 low.

Gold daily candlestick chart

Copper

While gold has been shackled by the conflict in the Middle East and a hawkish shift in US rates, Dr Copper has been busy carving out a very different path.

Copper futures finished 2.56% higher overnight at $6.58 (+1.45%), not far from its recent $6.7160 record high, bolstered by another session of resilient US economic data.

The spark for copper’s overnight gains was the May ISM manufacturing purchasing managers' index (PMI). The headline index jumped to 54, from 52.7 the previous month, its fastest pace in four years. Crucially for copper, the new orders component showed renewed strength, lifting to 56.8 from 54.1, indicating that demand for raw materials is accelerating.

In the world of base metals, ‘good news is good news’. While robust data traditionally pressures gold via higher yields and a stronger dollar, it emboldens copper bulls, who view it as a green light for future industrial consumption and broader global economic health.

Beyond the data, copper continues to be supported by a ‘perfect storm’ of structural drivers, which has contributed to its 15% gain this year. Supply remains precarious following ongoing disruptions at major mines in South America and a persistent lack of new ‘tier‑one’ projects.

Layered on top of this is the drive for artificial intelligence (AI) dominance. The massive expansion of data centres required to support AI infrastructure is incredibly copper‑intensive, creating a new, non‑cyclical pillar of demand that is fundamentally tightening the market.

Copper technical analysis

The technical picture for copper remains decidedly more bullish than that of its precious metal cousin. After a false start midway through last year, copper has convincingly broken higher this year, carving out a series of higher highs and higher lows, with the most recent rally taking copper to a record high of $6.7160.

After a sharp 8.4% pullback from that peak, the metal has found solid buying interest in the $6.15/$6.12 horizontal support band and is now attempting to push back towards recent highs.

As long as price holds above the $6.15 - $6.12 support band (on a sustained basis), the uptrend remains firmly in place and a retest and break of the $6.7160 record high is likely before a push towards $7.00.

A sustained break below support at $6.15 - $6.12 would warn of a deeper pullback towards $5.90 - $5.80.

Copper daily candlestick chart

• _{Source: TradingView. The figures stated are as of 2 June 2026. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}