Commodities to watch US PCE, FOMC minutes in holiday-shortened week

Commodities outlook for next week

• Commodity markets to focus on Federal Reserve’s preferred inflation gauge
• FOMC meeting minutes, US advance GDP data for Dec, flash PMI readings from major global economies to be closely monitored
• Markets will also watch the Supreme Court’s ruling on Trump tariffs scheduled for February 20

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Markets remained volatile last week, driven by sharp swings in technology stocks amid growing concerns over AI-driven disruption and shifting expectations around Federal Reserve rate cuts.

The US Dollar Index closed near 97, down over 0.7% for the week, as traders assessed a mixed set of US economic data alongside recent political developments in Japan. Official US data showed robust payroll gains of 1,30,000 and a lower-than-expected unemployment rate of 4.3%.

Coupled with this, weaker-than-expected retail sales and softer inflation data, with headline CPI easing to 2.4% YoY, slowest pace in nearly five years, reinforced expectations of potential Federal Reserve rate cuts. Meanwhile, major US equity benchmarks ended the week with losses exceeding 1%, as fears that artificial intelligence could disrupt entire industries weighed on investor sentiment.

Precious metals finished higher. Gold and silver advanced as softer inflation and retail sales data, combined with a resilient labor market, strengthened expectations of a more accommodative Federal Reserve policy path. Comex Gold settled at $5,045 per ounce, up 1.4% for the week, while Comex Silver rose 1.5% to close near $78, snapping a two-week losing streak. However, silver remains roughly 36% below its recent record highs and continues to consolidate within a broad range. Elevated volatility persists in silver, partly due to subdued Chinese participation ahead of the Lunar New Year and renewed weakness in US technology stocks.

On the daily chart, MCX SILVER futures experienced a sharp decline last Thursday, followed by three days of sideways movement. The price is currently below the 20 EMA and the Supertrend (7,3), reflecting a bearish outlook. A breach below the initial support at Rs 2,25,800 per kg could trigger further downside, with bears potentially driving the price to Rs 2,07,000. Conversely, a breakout above the initial resistance at Rs 2,69,500 might push the price toward the next resistance level at Rs 2,91,500.

WTI crude oil prices closed below $63 per barrel, marking a second consecutive weekly decline. Prices were pressured by easing geopolitical tensions and renewed concerns over a potential supply surplus. The risk of near-term military action diminished after President Trump indicated that US–Iran negotiations could extend for up to a month.

Additionally, the International Energy Agency (IEA) warned that the oil market could face a sizeable surplus of around 3.73 million barrels per day in 2026, despite supply disruptions in January. Oil prices may remain rangebound as traders assess lingering geopolitical risks and reports that OPEC could resume production hikes from April to meet peak summer fuel demand.

Looking ahead, markets will focus on the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, due on February 20, as a softer reading could pull forward rate-cut expectations to June from the current July pricing. In addition, FOMC meeting minutes, US advance GDP data for December, and flash PMI readings from major global economies will be closely monitored.

Markets will also watch the Supreme Court’s ruling on Trump tariffs scheduled for February 20. The week ahead will be holiday-shortened with potentially thinner liquidity. US markets will be closed for Presidents' Day (February 16), while Chinese exchanges remain shut until February 23 for the Lunar New Year, conditions that could amplify volatility, particularly in commodities.