The perceived global copper deficit is misleading. Sufficient inventory exists, but it's concentrated in the U.S. due to tariff-related import front-loading. The bull case for copper hinges on London Metal Exchange prices rising enough to incentivize the costly re-export of this 'trapped' copper to Asia.
While investor demand drives headlines, the jewelry sector—40-50% of total demand—is under immense pressure from high prices. While currently compensated for by investment inflows, a sudden, sharp drop in jewelry consumption could emerge as a significant and overlooked drag on gold prices if the rally continues.
JPMorgan forecasts a drop in central bank gold purchases in 2026. This isn't a bearish change in strategy, but a mechanical effect of higher prices. At over $4,000/oz, central banks can buy fewer tons to achieve their desired percentage allocation of gold reserves, indicating continued structural demand.