Qatar National Bank (QNB) expects global economic growth to moderate and inflation to continue declining, citing stable commodity prices as an indicator of a more positive economic performance scenario, despite concerns that a second term for re-elected U.S. President Donald Trump could result in unbalanced growth and inflation.
QNB noted in its weekly report that most cyclical commodities are now stable and priced below recent peaks. It highlighted the continued decline in the copper-to-gold price ratio, along with gold outperforming silver prices, indicating no significant pressures from rising demand or excessive economic activity.
The report said that following Trumps victory and the Republican Partys control of both the Senate and House of Representatives, questions arose about whether Trumps second term will adopt a hardline approach to controversial proposals, such as tariffs, fiscal policies, and immigration.
It added that it was difficult to predict the US policies under a Trump administration, but that there was some use to analyze the implications of key commodity price movements on the global economy.
The report said that Commodities provide important insights into the overall health of the global economy due to their relevance in construction, transportation, manufacturing, and food production. They also offer valuable information related to sentiment trends and inflation, as commodity prices often lead or confirm cyclical turning points.
QNB explained that commodity prices remain significantly lower than their peaks in May 2022 but have been relatively stable this year. This stability contradicts narratives suggesting a re-acceleration of the global economy, a sharp inflation spike, or an imminent severe slowdown. The price corrections after the May 2022 peaks indicate that the downward trend in inflation remains intact. Moreover, price stability since the beginning of the year suggests resilience in global consumption and investment. A moderate increase in industrial metal prices, particularly copper, year-to-date reflects improving growth conditions in emerging Asia, especially China, a major copper consumer.
The report also pointed to that the copper-to-gold price ratio, a traditional measure of growth, inflation expectations, and risk sentiment, indicates a moderate outlook for the coming quarters. This contrasts with the notion that a second Trump term might boost GDP potential and inflation, strongly driving investor risk appetite. If that were the case, copper prices would be rising faster than gold prices, increasing the copper-to-gold ratio. Instead, the opposite has occurred. Based solely on commodity markets and their dynamics, this suggests expectations of lower inflationary pressures alongside moderate growth.
The report highlighted that rising precious metal prices are more likely a reflection of heightened geopolitical risk premiums and increased institutional demand for assets not tied to specific jurisdictions, rather than factors directly related to growth or inflation. Gold prices are near record highs, having risen by 42% since May 2022. However, silver prices, which are key to the new economy, remain well below recent highs and have generally underperformed gold. If there were a significant trend of rising growth and inflation, silver prices would have increased more rapidly than gold.
QNB concluded that its analysis suggests continued moderation in global growth and inflation, with stable commodity prices reinforcing this outlook.
