Qatar National Bank considered that the recent developments in the commodity markets predict a further slowdown in the global economy, while precious metals prices show an increase in demand for non-US safe havens and the continuation of inflationary pressures.
The bank stated, in its weekly report, that taking a closer look at commodity price movements can shed light on important aspects of the global economic outlook, as developments in some commodity prices provide macroeconomic information, including general sentiment and inflation trends, and usually lead Or confirm cyclic turning points.
He attributed the recent correction in commodity prices to several elements, including that commodity prices indicate that the global economy will witness a further slowdown, as higher interest rates, liquidity withdrawals, restricted financial spending, and lower disposable income due to inflation lead to The decline in aggregate demand, which leads to a slowdown in activity, and this is evident in the large correction in the prices of more cyclical commodities, such as energy and base metals.
The report indicated that although Brent crude prices are still slightly higher than pre-pandemic levels (Covid-19), they have decreased by 38% from their recent peak, in addition to the decline in copper and wood prices, which are two important indicators of activity in China. And the United States, from recent highs, adding that such price performance indicates that headwinds and persistent slowdowns in the United States and Europe continue to dominate the global growth outlook.
Qatar National Bank also based its analysis on the decline in the value of the US dollar, as gold prices recently outperformed the performance of long-term US Treasury bonds, indicating that foreign and local investors from the private sector prefer safe havens not issued by the United States, indicating that the high demand On non-US safe assets, such as gold, it implies a potential decrease in demand for the US dollar.
He stressed that the ratio of US Treasury bonds to gold is an important indicator of sentiment towards the US dollar, as the decline in this ratio often indicates a turning point in the US dollar cycle, from high sentiment towards the dollar in the market to its decline as a result of the preference for other currencies, and the decline in the value of The dollar is also a good indicator of the strength of economic performance outside the US, and this can be particularly positive for emerging markets as it stimulates more positive inflows of foreign capital.
The report pointed out that the rise in the prices of precious metals contributed to the continuation of inflationary pressures, especially since gold prices are close to their highest levels ever, and the prices of silver, which is one of the main inputs to the new economy (technology and clean energy industries), rose more than gold in In recent months, indicating the continuation of some pressures on the real economy, despite the global slowdown, stressing that the decline in the gold-to-silver ratio amid a strong performance of gold is a sign that inflationary pressures are still not ready to fully recede.
