Commodity Carnage: Gold and Copper Nosedive as Speculative Bubble Bursts

Global commodity markets witnessed a session of historic volatility on Thursday, characterized by a “flash crash” dynamic that saw prices skyrocket to record highs before violently reversing as liquidity vanished.

The Copper Frenzy

Copper took center stage, with LME three-month futures surging 11% intra-day—the largest single-day rise since 2009—to breach $14,500 per tonne. The rally was short-lived, with analysts citing a “speculative blow-off top”.

Fundamentals suggest a disconnect. Data indicates that China, the world market's largest consumer, faces weak demand. Analysts at Saxo Bank noted the widening gap between near-term fundamentals and speculator mania.

Key Market Data

• Copper Peak: Breached $14,500 before reversal.
• Intra-day Surge: 11% (largest since 2009).
• Gold Drop: Plummeted over 3% from highs.

Gold Plunges 3% from Peaks

The volatility contagion spread effectively to precious metals. Gold (XAU/USD), having touched a record near $5,600, plummeted over 3% to trade around $5,266. Silver followed suit, failing to hold gains above $118.

The reversal coincided with a risk-off tone as the “Magnificent 7” tech stocks faced heavy selling pressure. This triggered a liquidity squeeze. Despite the flush, long-term bulls like Jeffrey Gundlach view physical assets as the only hedge against “inflationary policy” in the US.

Technicals

• Gold (XAU/USD) Resistance: $5,600
• Gold Support Level: $5,266
• Silver Pivot: $118