Developments in Financial and Commodity Markets

Global markets are entering a late-cycle phase marked by rising financial fragility and policy constraints. The Fed is facing a balance-sheet trilemma which limits its capacity to stabilise rates without expanding intervention. Japanʼs reduced bond-market support has triggered volatility with spillovers to global yields. Precious metalsʼ sharp swings reflect tightening liquidity, geopolitical stress, and late-cycle dynamics, reinforcing demand for real assets. Meanwhile, WEF 2026 takeaways highlight global economic and policy trends, including evolving defence budgets, AI-driven investment patterns, and variations in energy policy, which may influence market diversification and regional investment strategies. 

Spainʼs construction and infrastructure firm, Ferrovial, became the first Spanish IBEX 35 company to join the Nasdaq-100 in December 2025, following its US market debut in May 2024. The move reflects the firmʼs growing international footprint and investor appeal, supported by a strong domestic backdrop. Spainʼs construction sector has been a key driver of economic growth, accounting for 10.4% of GDP in gross fixed capital formation and 5.3% of gross value added in 2024. A supportive environment of rising infrastructure investment, urbanisation, and affordable energy has contributed to the sectorʼs expansion. The construction market, valued at €112.7 billion in 2025, is projected to grow at a 5.4% CAGR through 2033, providing a strong foundation for companies such as Ferrovial to expand abroad and attract global capital.

After several years of contraction, the Bundesbank expects the German economy to gradually recover during  2026, with growth gaining momentum from the second quarter onward. The upturn is projected to be supported by increased public investment in infrastructure and other sectors. Additionally, a rebound is expected in exports, housing investment, and private consumption, supported by wage growth. 

Export momentum may face some headwinds from evolving trade dynamics.

Calendar- adjusted GDP is forecast to rise by 0.6% in 2026 and 1.3% in 2027, before easing slightly in 2028. Inflation has been declining more slowly than expected and is projected to reach the 2% goal between 2027–2028. While fiscal expansion should support activity, it will also lead to a higher government deficit ratio in the coming years.

Precious Metals and Commodities

Oil and agricultural commodities are likely to rise in the near term, narrowing their performance gap with precious metals. While recent volatility makes near- term price movements in precious metals difficult to forecast, the structural factors supporting the broader commodities bull market remain intact.

Market Risk Signal

Gold vs stocks forecasting model

The current level of debt relative to real economic output is similar to the situation in the Germanic nations prior to the World Wars in the 1910s, and in France leading up to the French Revolution in the 1790s. In such high-debt scenarios, the likelihood of instability and a deleveraging process is greatly increased. Since gold holdings are typically free from anotherʼs liability, the deleveraging process has a gentler impact on gold prices than on equities. The anticipated deleveraging process can be modelled using coupled differential equations, which suggest that gold will likely outperform stocks from 2022 onwards. The model was calibrated in 2019 and has not since been adjusted for new input data.

According to the model, the peak at which economic activity assets (such as equities) will outperform gold is around Q3 2022. From that point forward, the model predicts an outperformance of gold relative to stocks (light line). When compared to real data on the stock-to-gold price ratio (dotted line), the trend of gold outperforming stocks appears to have begun early in 2022. Whether a short-term reversal will occur remains uncertain; however, the long-term trend towards stronger gold performance remains evident.

04 Mar 2026 | Categories: Gold, Silver, Platinum, Palladium, UK, Europe

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