Gold is attracting renewed demand as bond yields climb and central banks diversify away from traditional reserve assets. Chandresh Jain, Rates & FX Strategist-EM Asia at BNP Paribas, said, “Our view is that gold will continue to head higher… we’re calling for closer to $4,000 per ounce levels next year.”
Ranodeb Roy, Co-Founder and CIO at RV Capital, pointed out that central bank buying has increased by 50–100 tonne a year since 2022, after Russia’s reserves were frozen.
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Jain said losses on long-maturity bonds are weighing on global investors. “It’s definitely worrisome… investors are making losses on that portfolio, and their trading volume comes down as well,” he said. Japan’s central bank has cut back on bond buying, leaving fewer big buyers in the market. Jain noted, “Clearly, it’s a sign that we should be heading towards even steeper curves.”
Roy linked this to the unwinding of years of ultra-loose policy. “The Piper needs to be paid someday,” he said, adding that the return of term premium means long-dated bonds must now carry higher yields.
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On currencies, Roy sees further pressure on the dollar. “Another 10% is possible from here,” he said, while Jain expects a smaller move of 2–3%. Both agree that the US may tolerate a weaker currency to support manufacturing.
For India, Jain was cautious on the rupee. “I’m less positive on rupee right now… INR will still underperform and will probably range towards 87 to 89,” he said, citing slower nominal GDP and potential risks for IT exports from AI adoption.
Despite the turbulence, both analysts dismissed fears of a repeat of the 2013 taper tantrum. Roy said, “We are nowhere close to a taper tantrum scenario. At least India is in a much better shape.”
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