China data, US core PCE and Trump’s Davos remarks to guide commodities next week

Commodities Outlook for next week

• Commodity markets to focus on economic releases from China, US core PCE, final GDP, flash manufacturing PMIs
• Bias expected to remain mildly positive for MCX Gold Futures
• Bank of Japan widely expected to keep rates unchanged at its upcoming meeting
• Traders to watch President Trump’s speech at World Economic Forum in Davos for further policy signals

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Markets navigated a turbulent week amid escalating geopolitical risks, renewed concerns over Federal Reserve autonomy, and President Trump’s wavering nomination of Kevin Hassett as the next Fed Chair.

The US dollar advanced for a third consecutive week, reaching a seven-week high above 99.4, supported by resilient economic data that tempered expectations for near-term Fed rate cuts. Weekly jobless claims fell sharply to 198K, underscoring continued labour-market strength despite elevated borrowing costs. Manufacturing sentiment improved notably, with both the New York and Philadelphia Fed surveys turning positive. While inflation data remained mixed and sticky, retail sales rebounded strongly, reducing pressure on the Fed to act quickly.

US equity markets, however, ended the week lower as risk sentiment deteriorated amid growing concerns over central bank independence after federal prosecutors launched a criminal probe into Fed Chair Jerome Powell. Adding to the uncertainty, President Trump announced a 25% tariff on countries trading with Iran, further weighing on risk appetite and boosting safe-haven demand.

Against this backdrop, COMEX gold and silver surged to record highs of $4,650.50 per troy ounce and $93.7 per ounce, respectively, driven by heightened geopolitical and policy uncertainty. Gold later eased below $4,600 per ounce, trimming weekly gains to around 2% as tensions around Iran moderated and fading expectations for imminent Fed rate cuts reduced momentum.

On the daily timeframe, MCX Gold Futures opened with a gap-up last Monday, decisively breaking and closing above the previous swing high. However, the price failed to sustain this momentum and moved into a sideways consolidation for the remainder of the week. Currently, prices are trading above the Supertrend (7,3) and the 20 EMA, indicating that the short-term bullish trend remains intact.

In the coming week, the bias is expected to remain mildly positive, with immediate resistance seen at Rs 1,43,600 per 10 gram, followed by Rs 1,45,200. On the downside, a break and sustained move below the initial support at Rs 1,40,500 could lead to further correction, with prices potentially testing the Rs 1,38,500 level.

COMEX silver still posted an impressive weekly gain of 11.7%, supported by tight global supply, strong investment inflows, and robust demand from clean-energy and AI-related sectors. However, silver saw a late-week pullback toward $86 per ounce after Washington delayed tariffs on critical minerals and Chinese authorities cut position limits and curbed high-frequency trading. Prices later recovered to close the week near $90 per ounce.

Base metals paused after a sharp rally, with prices consolidating from recent record highs amid profit-taking and softer sentiment following China’s clampdown on high-frequency trading. Copper led losses, slipping over 1%, while aluminium eased from multi-year peaks. Zinc outperformed, gaining more than 1% to around $3,209 per tonne, supported by tightening refined supply.

WTI crude oil prices initially surged to $61.5 per barrel, the highest since November, on fears of supply disruptions as tensions with Iran escalated following Trump’s cancellation of talks and the announcement of 25% tariffs on countries trading with Iran. Prices later retreated below $59 per barrel as immediate supply concerns eased after Trump said the killing of demonstrators had stopped and the US withdrew some personnel from military bases in the Middle East, eroding much of the geopolitical risk premium and leading to a flat weekly close.

Looking ahead, although policymakers remain cautious due to persistent inflation, leaving room for potential rate cuts later this year, Trump’s indication that Kevin Hassett may remain in his current White House role clouds the path to dovish Fed leadership.

On the data front, markets will focus on key releases from China, US core PCE, final GDP, and flash manufacturing PMIs from major global economies. Fed officials have already hinted they may pause rate cuts in January as the job market stabilizes and inflation stays sticky, so a hotter-than-expected inflation print could further push back expectations for March. The Bank of Japan is widely expected to keep rates unchanged at its upcoming meeting, while traders will also watch President Trump’s speech at the World Economic Forum in Davos for further policy signals.