Industrial metals are having more of an impact on the South African Rand (ZAR) than Gold, according to George Davis, Chief Technical Strategist at RBC Capital Markets.
Davis says the correlation between ZAR and industrial metals is currently much stronger than the correlation between ZAR and gold (see Chart 1) and given the industrial metals are outperforming the other commodity sectors (see Chart 2*), this is also bullish news for ZAR.
*The Relative Rotation Graph in Chart 2 shows how, relative to the Bloomberg Commodity Index (BCOM), industrial metals are leading while softs, agriculture and grains are starting to lag.
