3 days ago
QNB: Commodity prices signal softer global growth ahead
Tribune News Network
Doha
The global economy is adjusting to a more restrictive trade environment after a turbulent first half of 2025, marked by elevated uncertainty from US President Donald Trump's sweeping 'Liberation Day' tariff measures, according to QNB Economic Commentary. While economists and investors remain cautious, commodity markets are sending a more reassuring signal: moderating growth prospects, contained inflation risks, and resilience in underlying demand.
Despite the initial rounds of US trade deals failing to fully resolve policy uncertainty, commodity prices are providing clearer indicators of real-time economic momentum. Analysts point to three factors suggesting that markets are leaning toward a scenario of moderate slowdown rather than runaway inflation or sharp recession.
The overall performance of commodity indices remains well below their cyclical highs of May 2022 and has been trading in a narrow range since the start of 2025. This stability challenges extreme macro narratives, showing neither an uncontrolled growth re-acceleration nor signs of a steep downturn.
Energy and industrial metals have avoided major price spikes, reinforcing the global disinflation trend despite the sharp depreciation of the US dollar and tariff-related inflation risks at home. Base metals including copper, aluminium, and nickel have posted modest gains this year, reflecting optimism tied to emerging technologies, electric vehicles, artificial intelligence, and Asian industrial demand.
The copper-to-gold ratio, a closely watched gauge of growth and inflation expectations, continues to trend lower. In a pro-growth policy environment, copper – seen as a growth-sensitive asset – would typically outperform gold, pushing the ratio higher. Its current decline instead reflects investor caution, consistent with expectations of slowing growth alongside stableinflation.
Gold prices remain near record highs of about USD 3,330 per troy ounce – up nearly 80% since the 2022 commodity peak. Analysts attribute this strength to geopolitical uncertainty and demand for jurisdiction-free assets, rather than fears of imminent inflation. Silver, which has lagged gold in recent years despite its industrial role in green technology, has recently begun to recover, hinting that industrial demand may have bottomed. However, silver's underperformance relative to gold reinforces the view that markets are not pricing in a broad-based upcycle.
Taken together, the trends suggest that commodity markets are pricing in a 'soft landing' for the global economy – moderate growth paired with continued disinflation. While Trump's tariff agenda has unsettled global trade, the absence of major commodity volatility indicates that industrial activity remains resilient and inflation expectations well anchored.
For investors, the message from commodities is clear: despite political turbulence, the risk of runaway inflation or a sharp recession appears contained.
