As U.S. President Donald Trump escalates global tariff actions, intensifying concerns about economic prospects, the prices of gold and copper extended their declines on Monday, while the gold-to-silver ratio surged to a five-year high. The commodity market selloff continues to spread.
Spot gold, which had recently hit record highs, experienced an intraday drop of as much as 1.3%, while U.S. copper futures plummeted 8.5%. By 6:45 AM Singapore time, U.S. copper prices dropped over 5% to $4.1785 per pound, and gold was down 0.7% to $3,015.85 per ounce. The Bloomberg Commodity Index fell 5.8% last week, marking its worst weekly performance since 2022. On Friday, the London Metal Exchange (LME) experienced its largest selloff since March 2020.
While gold is traditionally viewed as a safe-haven asset (with approximately 15% year-to-date gains), it’s not uncommon for investors to sell gold in extreme market conditions to cover losses in other assets.
Meanwhile, concerns about a recession have pushed the gold-to-silver ratio above 100, the highest level since May 2020. Analysts noted that silver has significantly underperformed gold in the selloff: spot silver traded below $30 per ounce last Friday, with a weekly decline of over 13%, compared to gold’s modest 2% drop. Spot gold was priced at $3,019 per ounce, down 4% from its overnight high on Thursday.
Economists warn that Trump’s tariff policies could severely impact the global economy and potentially trigger a recession. Commodity analysts pointed out that around 50% of silver’s demand comes from industrial sectors, where it plays a crucial role in the global electrification progress. Any economic slowdown could directly weaken silver’s demand. Chris Vecchio, Head of Futures Strategies and Forex at Tastylive.com, emphasized that silver is not a recession-proof asset, as it is fundamentally an industrial metal, whereas gold is the only true recession-proof metal.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, attributed the heightened volatility in gold and silver markets not only to economic concerns but also to the unwinding of arbitrage trades caused by Trump’s tariff threats. Large flows of gold and silver had previously moved into New York vaults to hedge against potential tariffs. However, as these two precious metals were eventually exempted from the tariffs, the futures-spot premium collapsed. Silver inflows into COMEX-monitored vaults surged by 51% year-to-date, but any reversal could further weaken an already soft market.
Despite the short-term pressure, Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, believes the current high gold-to-silver ratio may signal an opportunity. He observed that after the ratio spiked in 2020, silver significantly outperformed gold. If industrial demand stabilizes or tariff concerns ease—combined with its long-term supply deficit—silver could stage a rapid rebound.
