US-Iran tensions to be in spotlight next week as US economic data looms

Commodities outlook for next week

• Crude oil and aluminum stand to gain most if the conflict deepens
• Upcoming US data could influence expectations for Federal Reserve policy
• Broader market trends likely to remain highly sensitive to geopolitical developments

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Raging US–Israel–Iran tensions weighed heavily on markets this week ended March 6, with Donald Trump’s demand for Iran’s unconditional surrender on Friday accelerating oil price gains and spiking volatility across global markets.

The US Dollar Index hit a three-month high of 99.7 on safe-haven flows and inflation fears from soaring energy costs, curbing expectations for Fed rate cuts. Early in the week, strong US data, including lower jobless claims, robust productivity growth, declining job cuts, and a stronger-than-expected ISM Services PMI, supported the dollar. However, weaker-than-expected February labour data, with non-farm payrolls down 92,000 and the unemployment rate rising to 4.4 percent, weighed on equities. The Nasdaq Composite, S&P 500, and Dow Jones Industrial Average closed the week down 1 percent, 2 percent, and 3 percent, respectively, while the dollar eased below 99 amid revived expectations of policy easing.

Bullion saw sharp swings. Gold rose above $5,430 per ounce early in the week, and Silver climbed above $97 per ounce after US–Israeli strikes prompted Iranian retaliation. However, a stronger dollar and forced liquidation pressured prices. Gold briefly tested $5,000 before closing just below $5,160 (-1.5 percent), snapping a four-week winning streak. Silver fell to $78 before rebounding to $84 per ounce, down 10 percent for the week. Despite geopolitical risks, bullion remains range-bound as safe-haven demand competes with dollar strength.

On the daily chart, MCX Gold Futures is consolidating after a steady rise while holding above the rising 20 EMA, keeping the short-term bias positive. Price faces immediate resistance at Rs 1,64,900 per 10 gram; a sustained move above Rs 164,900 may extend gains toward Rs 169,880. On the downside, support is placed at Rs 1,58,177, followed by stronger support near Rs 1,53,303. Overall trend stays constructive while price holds above Rs 1,58,177.

Energy markets were the most volatile. West Texas Intermediate Crude Oil surged to $92.6 per barrel, its highest since September 2023, before ending above $91 per barrel, a 35.6 percent weekly gain, the largest since 1983. Rising US–Israel–Iran tensions disrupted supplies and shipping, accelerating after Trump’s demand for Iran’s unconditional surrender.

Iran’s Foreign Minister Abbas Araghchi confirmed no ceasefire or negotiations. Supply risks intensified as China halted fuel exports, Japan considered releasing reserves, and Iraq cut production. Qatar warned Gulf producers could halt exports if tankers cannot pass through the Strait of Hormuz, potentially pushing prices toward $150 per barrel. The Brent–WTI spread narrowed below $2 per barrel, reflecting US crude demand amid Middle East supply concerns.

Base metals closed mixed. Aluminium surged nearly 10 percent to $3,446 per tonne, its strongest weekly gain since 2024, on supply disruptions in the GCC region, which account for over 9 percent of global output, and attacks affecting shipments from Qatar and Bahrain. Copper fell 4 percent to $12,862 per tonne amid a stronger dollar, rising inventories, and China’s modest 4.5–5 percent GDP target. Nickel and Zinc also eased amid risk-off sentiment and rising oil prices.

Markets remain fixated on the US–Iran conflict as Trump has vowed to strike “very hard,” while Iran’s president apologized for regional strikes and said Iran would refrain from attacking neighbouring countries “unless attacked first”. Crude oil and aluminum stand to gain most if the conflict deepens.

While upcoming US data, including the CPI, Core PCE Price Index, Preliminary GDP, and JOLTS Job Openings, could influence expectations for Federal Reserve policy, broader market trends are likely to remain highly sensitive to geopolitical developments in the West Asia.