Warsh pick jolts markets: Dollar nears 98, gold whipsaws 21% then snaps back, oil rebounds above Rs 5,900

Commodity markets outlook for next week

• Attention turns to official non-farm payrolls report due February 11
• CPI, retail sales data, and speeches from several Fed officials will be closely monitored
• oil prices may remain cushioned by lingering geopolitical risk

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A sharp tech selloff combined with heightened monetary policy uncertainty triggered dramatic moves across global markets.

The US dollar regained momentum, edging closer to 98, supported by a shift toward a more hawkish Federal Reserve outlook following the nomination of Kevin Warsh. Firmer US Treasury yields, after manufacturing data surprised to the upside, further underpinned the greenback. Markets continue to assess Warsh’s policy stance amid mixed signals as President Trump hinted at imminent rate cuts, while Fed Governor Lisa Cook warned of upside inflation risks and limited scope for near-term easing.

A late-week recovery in AI stocks, after heavy selling on concerns over outsized investment by tech giants, eased safe-haven dollar demand and fueled a sharp rebound in US equities, with the Dow Jones breaking above 50,000 for the first time.

Precious metals experienced extreme volatility, driven by the Warsh nomination, CME margin hikes, and heavy leveraged positioning. COMEX gold ended the week higher after violent two-way price action. Prices briefly fell to a one-month low near $4,423 an ounce, rebounded sharply above $5,100, and settled near $4,980 per ounce, up roughly 5% on the week. Over the past two weeks, gold has swung from record highs above $5,600 to a 21% correction, followed by a swift 15% recovery.

COMEX silver, meanwhile, closed the week down more than 9%, despite rebounding from seven-week lows near $63.9 an ounce to settle around $77.5. Softer US labour data and stabilization in tech stocks helped drive a late-week rebound in both gold and silver.

Base metals also came under pressure amid the broader metals selloff. LME copper closed below $13,000 per tonne, while aluminum, zinc, and lead each posted weekly losses of nearly 2%. The weakness reflects traders reassessing positions amid heightened volatility and reduced purchasing activity from Chinese fabricators ahead of the Lunar New Year, which typically dampens near-term demand.

WTI crude oil, which dipped toward $61 per barrel earlier in the week on optimism over a potential US–Iran deal, rebounded above $65 per barrel following reports that negotiations may have stalled and after a sizable drawdown in US oil inventories. Oil prices ultimately settled near $63.5 per barrel, down about 3% on the week, as concerns over near-term supply disruptions eased ahead of US–Iran talks in Oman, while Russia–Ukraine peace discussions ended without a breakthrough. Looking ahead, oil prices may remain cushioned by lingering geopolitical risk, despite Iran indicating nuclear talks with the U.S. are off to a “good start.”

On the daily timeframe, MCX CRUDEOIL futures opened the week with a sharp decline but found support at the 20 EMA and closed above it. The price retested this level on Friday and rebounded, reinforcing its significance as a near-term support. Currently, the price is trading above the Supertrend (7,3), maintaining a bullish bias. A sustained breakout above the initial resistance at Rs 5,932 per barrel may trigger further upside toward Rs 6,100. Conversely, immediate support is seen at Rs 5,648, with the next downside level at Rs 5,515.

Near-term commodity price action is likely to remain choppy amid fresh margin hikes and caution ahead of key US data releases. Volatility in gold and silver may persist as CME raised gold futures margins to 9% from 8% and silver margins to 18% from 15%, effective Friday’s close.

Following a string of labour market reports that largely surprised to the downside, attention now turns to the official non-farm payrolls report due February 11 as significant downward revisions could strengthen the case for future rate cuts. US CPI, retail sales data, and speeches from several Fed officials will also be closely monitored.