Nasdaq, Gold & Copper Surged to Record Highs on May 20

As traders navigate geopolitical uncertainties, reassess the Federal Reserve’s interest rate cut timeline, and await earnings reports from big companies like Nvidia (NVDA), three assets closed at record highs on Monday, May 20, 2024; the Nasdaq, Gold (XAU), and Copper (HG).

Here is what you need to know about the reasons behind the surge and what it could mean for traders:

Nvidia Powers the Nasdaq to New Record Highs

The tech-heavy Nasdaq (US-TECH 100) closed at a record high on Monday, May 20, at 16,794.87 points, possibly fueled by anticipation surrounding the big tech giant Nvidia’s upcoming earnings report, which will be published tomorrow, Wednesday, May 22.

At the centre of traders' attention, Nvidia gained 2.49% on Monday, exceeding Microsoft (MSFT)  which gained 1.22% and Apple (AAPL) and Alphabet (GOOG), which remained relatively flat at around +0.6%. Conversely, Amazon (AMNZ), Meta (META) and Tesla (TSLA) ended the day in the red.

A positive earnings season so far, coupled with signs of easing inflation in the United States, may have reignited hopes of the Fed cutting rates later this year. This optimism among some traders may have pushed some of the most traded stock market indices higher on May 20. (Source: Reuters)

Gold Breaks Records with Price Above $2,435 for the First Time

Gold prices surged to a record high on Monday, reaching $2,435.96 per troy ounce for spot prices and $2,438.50 for futures contracts. This price surge is believed to have been supported by several factors, including geopolitical tensions in the Middle East and China’s stimulus measures. The anticipation of US rate cuts is another important factor influencing the price of gold nowadays. 

While inflation seems to remain sticky, there are some signs of improvement. Last week, US producer prices jumped but the American Consumer Price Index (CPI) showed a slowdown of inflation on the consumer side. For the month of April, the CPI index increased by 0.3%, after rising +0.4% in March and February.

Even though Jerome Powell, Fed’s Chair, and other FOMC’s officials recently emphasised that traders should expect rates to remain unchanged for a longer period than previously anticipated, some traders are still anticipating a rate cut in 2024. Some analysts anticipate that there is a 65% chance that the Fed will start cutting rates as early as September 2024.

Copper Price Surges Past the $11,000 Milestone

The world’s most important industrial metal, copper, witnessed a surge on Monday, pushing futures prices on the London Metal Exchange (LME) above $11,000 per ton for the first time ever. Marking a new all-time high during the trading session, copper prices have gained more than a quarter since January 2024.

So, what influenced the price of copper yesterday?

The increase of copper prices can be attributed to a range of factors, starting with a potential upcoming increase in demand, especially with the new applications of the versatile metal in data centres, renewable energy projects, and artificial intelligence (AI). 

Concerns about tight supply and potential shortages are also presumably further pushing prices higher. Additionally, a new flood of institutional investors into the copper market and bearish traders, who previously bet against copper prices (by shorting the asset) and which are now scrambling to buy back their positions, are likely to be adding to the upward pressure on the commodity.

Conclusion

Many traders are likely to be closely following the financial markets this week, with eyes not only on the continued performance of the Nasdaq, gold, and copper, but also on the effect of various upcoming economic data releases on the different markets. 

From inflation data from the United Kingdom and the RBNZ’s interest rate decision on Wednesday, May 22, to Purchasing Managers’ Index (PMI) from various parts of the world on Thursday, May 23, these reports are anticipated to provide valuable insights into the health of the global economy.

The release of the Fed’s latest meeting minutes (April 30th-May 1st) tomorrow (Wednesday, May 22nd), and key speeches from the central bank’s officials will also closely be followed throughout the week. Governor Christopher Waller’s address today at 9:00 AM ET is particularly anticipated, as he’s expected to shed light on the US economic outlook.