Daily Brief Macro: Why The Mining Boom is Just Beginning (Hedley Widdup) and more

• Central banks have been buying gold since after the GFC to diversify from US Dollars, underpinning the market with tightness
• Gold bull markets have been influenced by periods of conflict and economic stability, with central banks playing a significant role in influencing the price
• The second gold bull market starting around 2000 saw the gold industry aggressively buying back their hedges, pushing the price up alongside central bank buying and market forces

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• The BoE FPC cut capital requirements in a surprise macroprudential easing that adds to the less-tight fiscal policy to lessen the need for BoE rate cuts, but one is coming.
• UK CFOs reveal no progress in breaking excessive inflation expectations for 18 months, EA inflation surprisingly rose, and the worst PMIs improved as resilience broadened.
• Another Fed cut is firmly priced, setting it up to be delivered, but members are likely to dissent against it and remain cautious in only forecasting one more cut in 2026.

• Simandou’s arrival and softer mill output signal a clear shift toward weaker near-term demand, even as some investors position for policy surprises.
• Technical signals point to stretched momentum, with the broader setup now tilting toward elevated odds of a near-term mean-reversion pullback.
• The 65–62 spread climbed sharply this week, while the 62–58 spread moved lower, marking a notable divergence across grade differentials.

• RBI cuts repo rate by 25bps to 5.25% as expected, citing exceptional disinflation (0.25% October CPI) and 8.2% growth, though maintaining a neutral stance signals easing cycle may be nearing end.
• It forecasts headline inflation to fall to 0.6% in Q3 before rebounding sharply to 2.9% and 3.9% subsequently, limiting the scope for additional rate cuts despite growth moderating from current highs.
• Durable liquidity injections alongside rate cuts acknowledge monetary transmission constraints. The consensus sees 5.25% as the terminal rate, with policy dependent on inflation normalisation and external sector stability.

• Singapore’s stunning economic performance this year, led by strong exports and resilient domestic consumption, masks concerns over the impact of AI, tariffs and other challenges. 
• Government efforts to hedge industrial bets and trade relations, as well as enhance indigenous capacity by reallocating resources, provide some buffer against these issues. 
• Yet, the volatility of flows that comes with being a hub and the instability of the South China Sea are deeply intertwined with Singapore’s economic model. 

Highlights

• ENSO Conditions to be Neutral to Negative, But Not Falling to La Nina

• Session at COP30 Focuses on Smallholders in Climate Action

•  Integrating Climate Resilience into Production Systems Not Optional

  Dr. S. Abhilash, Director, Advanced Centre for Atmospheric Radar Research, Cochin University of Science and Technology, Kochi, India, warns the Indonesia and Malaysia regions of above normal rainfall in December that can impact rubber supply as well.

• In Depth: Shanghai Slaps $7 Million Record Fines on Nine Firms for Mazhou Island
• China Launches New Probe Into Aggressive Private Conglomerate
• China Exposes Massive Loan Kickback in Finance Graft Crackdown

• RBI’s MPC cut 25bp as expected, but it remains behind the curve, with the real policy rate now excessively high at +5%. RBI inflation forecasts were and remain too high. 
• Food deflation is likely to be shortlived, with vegetable prices rising MoM since May’25. But all other food and non-food inflation components are moderating, and GST cuts impart further disinflation. 
• We expect inflation to be 1.8%YoY in Q4FY26 (vs RBI’s 2.9%YoY forecast), 2.3% and 2.5% in Q1 and Q2FY27, so expect another 75bp reduction in repo rate by Aug’26.