Page 16 - Bullion World Volume 04 Issue 07 July 2023

Bullion World | Volume 3 | Issue 7 | July 2023

Asia Pacific Precious Metals Conference

Dr Taimur Baig - MD & Chief Economist, DBS Bank.

Keynote Address
Inflation, geopolitics and gold demand
Dr Taimur Baig - MD & Chief Economist, DBS Bank.

The presentation focused on three witnessing downward trends. The
major parameters in the order anticipation towards the Fed is that
below: they are looking to cut interest rates.
1. The inflation is easing, but a re-
rating of prices may be in order. The inflation hit for this region has
2. Geo-politics is pushing investors been extensive, but the cumulative
and policymakers to consider tail inflation has been well into the
risk hedges, and double digits. But individually,
3. Precious metals have a role to interest rates have not been a
play in portfolios and balance problem in these Asian regions.
sheets. The inflation drivers for the medium
term can be ageing with respect to Dr Taimur Baig
As far as inflation is concerned, inflation. Rapidly ageing countries green transition in the sense that this
risk aversion is mainly related to like Japan are considered a major should be a sustainable way rather
macroeconomic news. The inflation risk, with the risk of deflation than the old ways, which we have
peaked at around 8%, and the core increasing been using all throughout. Resiliency
PCE data has peaked at 5.5% with versus efficiency is one more driver
a downward trend the view which is The rising rate of unemployment can for inflation, and finally, geo-political
also supported by manufacturers. be another factor with respect to risks which eventually increase
Urban CPI and core PCE is also ageing. The other driver can be the inflation.

The geo-political factors including
USD weaponization and China’s
external strategy can be one of
the main geo-political factors. One
classic example is the initiation of
E-wallets on phones made in China.
Using such phones anyone across
the world can buy anything from
China, which can be considered a
threat hence being a geo-political
factor. E-CNY and Petro-CNY belt
and road are the other factors worth
considering

Apart from gold, no other asset has
seen exponential growth, copper is
ruling at the same price as what it
was many years ago. Overall global
growth is slowing. Fundamentally
there is no reason for gold to be
trading around 2000$. Nevertheless,
with huge central banks buying, the
price of 2000$ can be justified.

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