Developments in Financial and Commodity Markets

Markets are entering a more selective phase, where strong headline performance is being tested by deeper structural pressures across geopolitics, sovereign debt, AI economics, and strategic supply chains. Equity valuations remain elevated as AI momentum continues to support risk appetite, yet recent market behaviour shows that shocks, volatility, and uncertainty can quickly unsettle sentiment. The Trump-Xi summit appears to have reduced near-term escalation risk but has offered little concrete progress on the core economic and strategic security issues shaping the US-China relationship of late. Bond markets remain the clearest pressure point, as rising long-end sovereign yields suggest investors are demanding compensation not only for inflation risk but also for deeper concerns around fiscal sustainability and institutional credibility. Meanwhile, the Iran conflict is amplifying macroeconomic uncertainty through energy-price volatility, safe-haven flows, weaker external demand, and constrained policy flexibility. AI adoption remains a powerful growth narrative, but enterprise token costs are emerging as a margin and execution risk.

The conflict in Iran is shaping Switzerlandʼs economic outlook through its impact on the Swiss franc and inflation dynamics. Heightened geopolitical uncertainty has triggered strong safe-haven inflows, pushing the franc to multi-year highs and raising concerns over export competitiveness and deflationary pressure. In response, the Swiss National Bank has signalled a greater willingness to intervene in foreign exchange markets to limit excessive currency appreciation. While inflation remains low, the situation has introduced additional uncertainty into the outlook, particularly via energy prices and global demand. As a result, policymakers are relying more heavily on currency management as a key stabilisation tool amid limited room for conventional rate adjustments.

After several years of strong growth, Spainʼs economic outlook is now facing uncertainty as the Middle East conflict drives sharp increases in energy prices and heightens financial market volatility. To better assess the potential impact on the Spanish economy, the countryʼs central bank developed two alternative scenarios, “adverse” and “severe”, alongside its baseline forecast. Both scenarios assume higher energy prices and weaker external demand, resulting in slower GDP growth and higher inflation. In the adverse scenario, disruptions are temporary and only moderately affect growth and inflation. In the severe scenario, however, a prolonged conflict leads to sustained energy shocks that significantly weaken growth and sharply accelerate inflation. Rising energy costs 
would spread through the broader economy by increasing production expenses and consumer prices, while eroding household purchasing power. The uncertainty surrounding future geopolitical and market developments makes the case for gold ownership increasingly compelling.

Precious Metals and Commodities

Precious metals and commodities remain broadly supported, though near-term performance is likely to be mixed. Precious metals, copper, and oil may trade sideways in the short term, while agriculture faces upward pressure. Over the medium term, precious metals, copper, and agriculture are expected to strengthen, with oil remaining flat. In the longer term, the outlook across all major commodity groups remains bullish.

Market Risk Signal

Gold vs stocks forecasting model

The current level of debt relative to real economic output is similar to that of European economies prior to WW1, and to that of France leading up to the French Revolution in the 1790s. In such high-debt level scenarios, the likelihood of instability 
and a deleveraging process is amplified.

Since gold holdings are normally free from others’ liabilities, the deleveraging process tends to have 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 perform better than stocks from 2022 onwards. The model was calibrated in 2019 and has not since been adjusted for new input data.

Based on this model, the peak at which economic activity–linked assets (such as equities) outperformed gold was around Q3 2022. From then on, the model predicts an outperformance of gold relative to stocks (solid line). When compared to actual data on the stock-to-gold price ratio (dotted line), the trend of gold outperforming stocks appears to have begun early in 2022.

Since the modelʼs 2019 calibration, the AI boom has emerged as a significant new force influencing capital allocation, equity valuations, and debt creation. Like Covid, this may alter the trajectory and extend the timeline, however, it does not change the modelʼs underlying macroeconomic conclusion.

24 Jun 2026 | Categories: Gold, Silver, Platinum, Palladium

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