Is copper a safe haven for oil?

Chi Wei Su, Xin Yue Song, Meng Qin and Oana-Ramona Lobonţ

Resources Policy, 2024, vol. 91, issue C

Abstract: This paper uses bootstrap full- and sub-sample rolling-window Granger causality analyses to investigate the dynamic relationship between the copper market and oil prices (OP). The findings indicate that OP has both favourable and adverse effects in copper price (CP). The negative impact suggests that with the decline in OP, some investors may consider copper a potential safe-haven asset, anticipating its relatively stable performance, thereby potentially driving an increase in copper investment demand. However, the favourable influence of OP on CP does not support this viewpoint, primarily due to economic and geopolitical factors causing them to move in the same direction. Therefore, these results align about the price correlation framework, indicating that OP only affects CP during specific periods, but the impact direction remains uncertain. In the context of the growing interconnection between the commodity markets, particularly the crude oil and copper markets, studying the impact of international OP shocks on the copper market is beneficial for investors and related enterprises to make informed investments and risk mitigation strategies.

Keywords: Oil price; Copper market; Causality; Time-varying (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:91:y:2024:i:c:s0301420724002642

DOI: 10.1016/j.resourpol.2024.104897

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