Commodity market sentiment turned cautious later this week ended July 11 amid renewed US tariff threats, though impact on risk assets was more measured than the turmoil seen in April.
US President Donald Trump announced a 35% tariff on Canadian imports and a steep 50% levy on Brazilian goods, one of the highest tariffs announced to date, set to take effect on August 1. In addition, Trump signaled plans to raise the existing blanket tariff rate from 10% to 15% or even 20%. These developments, combined with FOMC meeting minutes showing most Fed officials remain concerned about tariff-driven inflationary pressures, pushed the US dollar higher. The dollar closed the week near the 98 mark, gaining momentum on the back of safe-haven flows amid tariff jitters.
US equities snapped their weekly winning streak as risk appetite waned amid Trump’s intensifying tariff rhetoric while, COMEX Gold surged to a two-week high of $3,381.6 per troy ounce on Friday, closing the week with modest gains. Silver saw an even sharper move, jumping to $39.22 per ounce, the highest level since 2011, driven further by signs of a short squeeze and strong ETF inflows.
Last week, MCX SILVER futures climbed above the all-time highs with weekly gains of nearly 5%. On the weekly chart, price is holding above all the key moving averages indicating a bullish bias. The momentum indicator RSI (14) has climbed near the 70 mark on the weekly chart which further demonstrates the bullish momentum for medium term. We expect price to maintain its bullish momentum in the coming week. The counter is expected to enter in a parabolic move on the higher side. The next resistance is observed at Rs 1,15,000 per kg. A break above this mark is likely to accelerate the momentum towards Rs 1,20,000 in coming sessions. On the flip side, immediate critical support is now observed at Rs 1,0,7000, below which the bias turns neutral.
Base metals on the LME ended the week on a mixed note. Copper led the declines, slipping over 2% to $9,660.50 per tonne as markets absorbed the impact of Trump's unexpected 50% import tariff announcement. After briefly pushing past the $10,000 mark in a record-breaking rally on COMEX, prices reversed amid concerns of a supply overhang, as traders front-loaded nearly a year’s worth of shipments into the US.
WTI crude oil rebounded sharply on Friday, bolstered by the International Energy Agency’s statement that the market is tighter than it appears. Prices were also supported by anticipation of a “major statement” by Trump regarding Russia and potential new sanctions due Monday. Saudi Arabia raising its official selling prices (OSP) for crude to buyers in Asia and Europe and expectations of robust summer demand, helped prices steady above $68 a barrel earlier in the week.
Looking ahead, headlines are expected to remain dominated by trade developments. On Saturday, President Trump imposed a new 30% tariff on imports from Mexico and the European Union, effective August 1, following stalled negotiations. He also warned of even higher duties should either party retaliate.
Next week is data-heavy, with markets bracing for key Chinese economic indicators as well as US inflation, retail sales, and consumer sentiment data, for insights into the monetary policy outlook.
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