Fed policy signals may guide commodities amid lack of US data

Commodities Outlook for Next Week

Signs of a US economic slowdown, the longest government shutdown on record, and mounting fears of an AI-driven market bubble weighed heavily on risk sentiment this week ended November 7. This risk-off tone helped gold prices rebound from one-month lows, while all three major US equity benchmarks ended in the red. The tech-heavy Nasdaq bore the brunt of the AI-sector selloff, sliding 3 percent for the week, its steepest decline since April.

The greenback jumped to a three-month high of 100.36 after a five-day winning streak, following comments from Fed Chair Jerome Powell, who said another rate reduction was “not a foregone conclusion,” tempering expectations for a December cut. Powell highlighted divisions within the FOMC and the challenges of limited data amid the ongoing government shutdown. The dollar later eased, closing the week marginally lower at 99.5 as investors balanced the Fed’s hawkish stance against concerns over the broader economic outlook.

Employment data painted a mixed picture as ADP reported private payrolls rising by 42,000 in October, surpassing forecasts of 25,000 and signaling modest job growth, while Challenger, Gray & Christmas announced 153,074 planned job cuts, the highest October total in more than two decades, pointing to potential weakness ahead.

COMEX gold consolidated in a tight range following last month’s sharp pullback from record highs. Renewed safe-haven demand, driven by concerns over a prolonged shutdown and uncertainty surrounding the legality of Trump tariffs, lifted prices back above $4,000 per ounce. Silver ended the week little changed, weighed by weakness in US equities and mixed economic data. ETF holdings in both metals declined after reaching three-year highs on October 21.

MCX Silver futures traded in a sideways pattern last week, remaining within the previous week’s range, reflecting market indecision. A decisive move beyond the range of Rs 1,44,000–1,50,000 per kg is needed to establish a clear direction. On the upside, a sustained break above the initial resistance at Rs 1,50,000 could push prices toward Rs 1,53,150. Conversely, a breach of the support at Rs 1,44,000 may see prices decline toward Rs 1,39,300.

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Kaynat Chainwala

Senior manager - commodity research|Kotak Securities

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Base metals ended the week mixed, as traders weighed slowing global growth against persistent supply tightness. China, the world’s largest consumer, saw both official and private manufacturing PMIs remain in contraction for the seventh consecutive month in October, dampening the industrial demand outlook and pressuring both metals and oil prices.

WTI crude closed 2 percent lower, weighed down by oversupply and softening demand. Prices fell to a two-week low of $58.8 per barrel after a 5.2-million-barrel rise in US inventories and Saudi Arabia’s cut to its official selling price for Asia to an 11-month low. A softer dollar, risk of US military action in Venezuela, and potential disruptions from sanctions on Russian oil helped WTI recover modestly, closing near $60 a barrel.

With limited economic data available due to the shutdown, the Fed’s policy path for December remains uncertain. Governor Stephen Miran welcomed the latest jobs report but said rates should remain lower for now, while Austan Goolsbee, Lisa Cook, and other officials warned of persistent inflation alongside a cooling labour market. Hawkish commentary from Chicago Fed President Goolsbee and Cleveland’s Loretta Mester highlighted the divisions among policymakers.

Looking ahead, markets will focus on the release, or possible delay, of US inflation and retail sales data, and scheduled speeches by FOMC officials, all crucial for shaping expectations for the Fed’s next move. Soft jobs readings have already pushed market odds of a December rate cut to 70 percent, up from 63 percent last week. Meanwhile, political pressure is mounting on Republicans to reopen the government as flight cuts and 10 percent capacity reductions at 40 major airports took effect on November 7.

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