All eyes on Powell, retail data as commodity markets brace for signals

Commodities Outlook

By Kaynat Chainwala, AVP Commodity Research at Kotak Securities

Following a brutal sell-off last week, markets staged a relief rally this week (ended April 11) after US President Donald Trump announced a 90-day pause on tariffs for most countries. This move triggered one of the biggest single-session rallies in Wall Street history, with the S&P 500 and Dow Jones posting their best performance since 2008, while the Nasdaq notched its second-largest one-day gain on record.

However, the rally was anything but smooth as risk sentiment was limited by the notable exclusion of China from the tariff pause. Instead, tariffs on Chinese goods were raised to 125%, further straining trade relations. In a swift response, China imposed 84% tariffs on US products. The tit-for-tat measures intensified further as the US hiked tariffs to 145%, heightening fears of deeper retaliation and raising the risk of a global economic slowdown.

While equities pulled back from higher levels amid recession concerns, gold emerged as a safe haven, soaring to an all-time high of $3,263 per ounce. The US dollar slipped to a four-year low of 99 as decline in consumer sentiment and a sharp rise in inflation expectations (now at 6.7%, the highest since 1981), dampened US economic outlook. Also, cooler-than-expected inflation data increased the likelihood of a rate cut at the June FOMC meeting.

MCX GOLD futures closed at all-time high (Rs 93,887 per 10 trams) last week registering highest weekly gain (6.5%) in recent time. The short-term bullish trend continues, as the price trades above the Supertrend (7,3) and the 20EMA. We expect price to maintain its upward trend this week but may find initial resistance at Rs 96,500 followed by Rs 98,000. On the flipside initial support lies at Rs 91,000 followed by Rs 90,000.

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Kaynat Chainwala

Senior manager - commodity research|Kotak Securities

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Silver jumped 8% and led gains among non-agricultural commodities, rebounding sharply above $32 per ounce, further supported by dollar weakness. Base metals posted modest weekly gains, with copper standing out with a rise of over 4%, driven by supply disruptions at key Chilean mines and expectations of Chinese economic stimulus.

Energy prices were down week-on-week as trade conflict between the world’s two largest economies heightened recession fears and weighed on demand prospects. However, WTI crude rebounded sharply from a four-year low of $55.12 per barrel, buoyed by the tariff pause and renewed concerns over potential tightening of US sanctions on Iran. Oil markets may be influenced next week by developments in the US-Iran nuclear talks that began in Oman on April 12.

Markets remain on edge as China’s decision to raise tariffs on US imports to 125% has intensified fears of a prolonged trade standoff. Meanwhile, US consumer sentiment continues to deteriorate amid the trade turmoil, and inflation expectations have surged, complicating the Federal Reserve’s policy outlook.

In the week ahead, markets will closely watch US retail sales data and speeches by Fed Chair Powell and FOMC officials. Chinese economic data will also be in focus, while the European Central Bank is widely expected to cut rates by 25 basis points at its April meeting.

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