Commodity markets brace for US-China truce decision, Trump-Putin meeting and US CPI next week

Commodity markets Outlook for Next Week

Kaynat Chainwala, AVP Commodity Research, Kotak Securities.

This week (ended on August 8) was marked by sharp volatility as Trump tariffs took effect, escalating US stagflation fears, but growing optimism around imminent Fed rate cuts provided markets with much-needed relief.

Fears of a broader economic slowdown in the US, coupled with expectations of a dovish shift in Fed policy, pushed the greenback below the 98 level. The dollar extended losses, while US equities closed higher for the week, as President Trump’s nomination of Stephen Miran as a temporary replacement for a Fed Board Governor fueled speculation that the central bank will adopt a less restrictive monetary stance.

COMEX gold prices surged to a record high of $3,534 per troy ounce on Friday following reports that the US has imposed tariffs on imports of one-kilo gold bars, the most commonly traded form on COMEX. The news sparked a sharp rally, pushing COMEX prices more than $100 above spot gold. However, the rally lost steam later in the session, with prices pulling back to close below $3,460 per troy ounce, trimming weekly gains to 2 percent as the White House later announced plans to issue an executive order to clarify its position on precious metals and tariffs. If upheld, the tariffs could significantly impact Swiss refiners as Switzerland exports large volumes of one-kilo bars to the US.

Earlier in the week, gold was underpinned by signs of economic weakness in the US, dovish remarks from several Federal Reserve officials, and growing expectations of interest rate cuts.

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Kaynat Chainwala

Senior manager - commodity research|Kotak Securities

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MCX GOLD futures surged last week, hitting a record high of Rs 1,02,250 per 10 grams on Friday. The price remains above the Supertrend (7,3) and 20 EMA, signaling a bullish outlook. The uptrend could persist, with immediate resistance seen at Rs 1,02,450. A breakout and sustained move above this level may drive prices towards Rs 1,03,600. On the downside, initial support is placed at Rs 1,00,500, followed by Rs 99,700.

WTI crude oil slipped below $63 per barrel as reports of progress in a US-Russia deal to halt the war in Ukraine boosted expectations of a potential meeting between Presidents Trump and Putin next week. Such a meeting could lead to eased sanctions on Russian oil flows. Oil posted its worst weekly performance since June, falling 5 percent, pressured further by rising OPEC+ output and softening global demand as US tariffs on over 70 countries came into effect.

Base metals gained momentum on signs of progress in US-China trade talks bolstered by Trump’s hints at possible deal extension. Stronger-than-expected Chinese export figures for July and Beijing’s continued efforts to tackle industrial overcapacity added to the bullish undertone, reinforcing demand prospects from the world’s top consumer.

Looking ahead, market moves could be influenced by the outcome of the US-China trade deal, with their 90-day truce deadline approaching on August 12, as well as the potential Trump-Putin meeting.

It’s a data-packed week ahead, with US retail sales, key Chinese economic indicators, and UK GDP figures in focus, alongside speeches from several Federal Reserve officials. However, the most closely watched release will be US CPI data, which could offer insight into whether tariffs are reigniting inflation pressures. Bets on a rate cut at the FOMC's September meeting have surged to 90 percent following substantial downward revisions in non-farm payrolls. A hotter-than-expected CPI print could prompt markets to recalibrate expectations, potentially spurring volatility.

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