US-Iran tensions, tariff fallout and China reopening to shape commodities next week

Commodities Outlook for next week

• US weekly jobless claims and Producer Price Index figures to be watched next week
• Commodities markets to closely watch developments between US and Iran
• Broader impact of Supreme Court’s tariff ruling and Trump’s upcoming State of the Union address to also remain in focus for investors

Did our AI summary help?

US–Iran tensions and a landmark ruling by the Supreme Court on President Trump’s global tariffs triggered broad volatility across asset classes this week, ending February 20.

The US dollar index rose to a one-month high of 98.1 as investors weighed moderating growth against persistent inflation and escalating geopolitical risks. Minutes from the January FOMC meeting signaled no urgency to ease monetary policy, reinforcing the Federal Reserve’s cautious stance. Meanwhile, mixed US economic data further complicated the policy outlook.

Fourth-quarter US GDP rose just 1.4%, partly reflecting disruption from the government shutdown, while core PCE inflation remained elevated at 3%, well above the Fed’s 2% target. The dollar eased on Friday and closed below 97.8, snapping a four-day rally after the Supreme Court struck down the tariff measure. US equities, which had been volatile during the week amid swings in technology stocks, welcomed the decision and closed slightly higher.

Bullion markets were also choppy. Trump’s pledge to impose a new 10% global tariff through an executive order renewed trade uncertainty and lifted safe-haven demand. Gold futures on COMEX recorded a third straight weekly gain, closing above $5,130 per ounce, while silver jumped more than 5% to move back above $84 an ounce. Earlier in the week, precious metals gained support from rising concerns about a possible US-Iran conflict, following Trump’s comments and reports of a larger US military presence in the region. However, a strong US dollar limited sharp gains.

WTI crude surged 5% to a six-month high of $67.05 per barrel on reports that Trump issued Iran a 10–15 day deadline to reach a nuclear agreement. Growing US military deployments have heightened fears of disruption to the Strait of Hormuz, a key chokepoint handling roughly one-third of global seaborne oil trade.

Meanwhile, a second round of Ukraine-Russia peace talks ended without progress, reinforcing expectations that Western sanctions on Russian exports will persist. Additional support came from the EIA report of a surprise 9-million-barrel draw in crude inventories, reversing much of the prior week’s build. Given the shortened diplomatic timeline and elevated geopolitical tensions, oil prices are likely to remain supported by a sustained risk premium.

MCX Crude Oil futures surged on the daily chart following a breakout above a Symmetrical Triangle pattern last Thursday. The price is currently holding above both the Supertrend (7,3) and the 20 EMA, reinforcing the bullish outlook. The upside momentum is expected to continue in the week ahead, with initial resistance seen at Rs 6,240 per barrel. A breakout above this level could push prices higher toward Rs 6,550. On the downside, immediate support stands at Rs 5,850, followed by Rs 5,640.

Base metals also ended firmer after a strong Friday rebound erased earlier losses. Most contracts rose more than 1% in the final session, allowing the complex to close slightly positive for the week. Copper climbed 0.64% to $12,964 per ton, while zinc outperformed with gains of around 1%. The late recovery came after a challenging week, marked by rising global inventories, subdued Chinese demand amid Lunar New Year holidays, and a firmer U.S. dollar.

Looking ahead, markets will closely watch developments between the US and Iran, especially any signs of progress or escalation in diplomatic talks or military activity. The broader impact of the Supreme Court’s tariff ruling and Trump’s upcoming State of the Union address will also remain in focus for investors. Besides, the reopening of Chinese markets on February 24 is expected to provide critical insights into post-Lunar New Year demand trends, especially for industrial commodities like base metals.

On the data front, US weekly jobless claims and Producer Price Index (PPI) figures, along with speeches from several FOMC officials, will be closely watched as investors seek clearer guidance on the timing of the Federal Reserve's next rate cut.