Arguably gold and copper are the two metal commodities most indicative of the state of the global economy.  The gold price moves up when investors feel all is far from well with the world, while copper rises when it is felt industrial production is picking up.

Over the past couple of weeks improved investor sentiment - to an extent boosted by some rather dubious assessments on the state of the world's economy from politicians, who have a vested interest in trying to convince the general public that things are getting better - has led to a pick-up in the global copper price, while the gold price fell back quite sharply.  Mineweb has expressed some doubts about this pattern of pricing and it now looks, in the very short term at least, that our misgivings may have been justified with gold kicking back well above the $900 level, while copper is seeing short term price falls.

Once again China has been to the fore in this pricing seesaw, with reserve building by national and provincial reserve bodies helping first stabilise copper, and thus be a major contributor in price increases.  This pattern has been rudely interrupted this week, with the Shanghai copper price off 9% as it is felt reserve building may have run its course, while the continuing global malaise sees little pick up in copper demand elsewhere.

As copper and other base metals began to rise in price, investor sentiment switched away from gold as funds and individual investors felt that perhaps the first signs of a global economic upturn, as represented by rising commodity prices, meant that gold's safe haven status was not quite so important.  But, over the past week gold has been creeping back up and went back through $900 yesterday, as commodity prices continued to slip on further unhelpful economic data suggesting the global recession may be with us for another year or more.

And then a statement by a Chinese official that the country has been quietly building its gold reserves, which now total over 1,000 tonnes making it the world's fifth largest gold holding country, has given the gold price another fillip (see China's been building its gold reserves - now over 1,000 tonnes).  This leads many to feel that the yellow metal could move back to testing its highs again, despite the likely weak demand period ahead through the northern summer months.  Indeed there could be a strong surge as the metal price was showing reasonable strength ahead of the Chinese disclosure, and the reaction today has already been sharply positive for the gold market.

So as gold rises, copper falls in the current economic scenario.  Should we see industrial demand genuinely pick up globally, rather than in pockets, then the reverse may come true again, but this is probably some way ahead yet and if more major economic shocks are yet to come, and this observer feels they will, gold's wealth insurance benefits will come to the fore again while copper, and other base metals prices, will remain weak until a genuine global industrial pickup is seen.