Commodity markets eye Fed signals, Nvidia earnings and Iran risks

Hotter-than-expected US inflation, hawkish Federal Reserve rhetoric and a surge in Treasury yields drove markets this week, lifting the dollar to a more than one year high and pressuring metals, while crude oil swung sharply on shifting signals from Washington over the Iran conflict. The dollar index rose above 103 for the first time since April 2025 and closed near 103.4 as hotter-than-expected October inflation pushed Treasury yields above 5 percent and reinforced an already hawkish policy backdrop. Headline consumer prices exceeded forecasts, while core CPI surprised to the upside for a third consecutive month.

The broadening of price pressures beyond energy weakened the argument that the Fed could look through inflation as a temporary consequence of the oil shock. Federal Reserve officials broadly signalled that inflation remained uncomfortably high and that further tightening might be necessary. Futures ended the week pricing an approximately 89 percent probability of a 25-basis-point increase in December and an 11 percent probability of a 50-basis-point move, with the latter up from almost no probability before the inflation data. Annual PPI accelerated to 6.5 percent, its highest level since November 2022.

Nevertheless, US equities recorded their strongest week since August, with the S&P 500, Nasdaq and Dow gaining more than 2 percent as a recovery in technology shares outweighed higher yields and uncertainty surrounding Nvidia. Spot gold declined approximately 4.6 percent to around $3,880 per ounce, its weakest weekly performance since early June, after touching a fresh one-year low near $3,852. Silver fell about 6 percent and closed below $49 an ounce after reaching a one-year low of $48.46. Gold's sharpest decline followed the US CPI release. With the 10-year yield moving from below 4.9 percent to 5.17 percent, the opportunity cost of holding non-yielding assets increased materially.

The subsequent recovery in crude oil reinforced inflation concerns and limited bullion's ability to recover. Earlier support from falling oil prices and hopes of progress towards a US-Iran settlement also faded as diplomatic signals became less conclusive. Crude oil traded in a wide range. Brent fell below $90 per barrel for the first time since August and WTI slipped below $84 after Trump indicated that further strikes against Iran were unlikely and suggested that the conflict could end relatively soon. The comments accelerated the removal of the geopolitical premium that began after the US midterm elections.

Prices later rebounded as supply risks returned to focus. Reported Houthi attacks on a pumping station along Saudi Arabia's East-West pipeline and an installation at Yanbu, together with tanker incidents in the Strait of Hormuz, revived concerns over Gulf supply and shipping. Trump's statement that Washington did not need an agreement with Tehran further tempered hopes of an imminent diplomatic settlement. Brent recovered above $97 and WTI moved above $89, although both benchmarks ended the week around 2 percent lower. Congressional Democrats are also considering whether to use the December 11 government-funding deadline to press for an end to the conflict, adding a domestic political variable.

The market is therefore balancing a reduced probability of near-term US escalation against persistent threats to Gulf shipping and Saudi energy infrastructure. In the absence of either a credible diplomatic agreement or a material supply disruption, Brent is likely to remain within a broad $90-$100 range and highly sensitive to geopolitical developments. Crude oil maintains a bearish bias following a breakdown below its rising trendline. Prices remain below the 20-day EMA and Supertrend (7,3), indicating continued weakness. The recent recovery appears corrective, with resistance at Rs 8,600 a barreland Rs 8,750 a barrel.

On the downside, a break below Rs 7,860 could extend the decline towards Rs 7,600. A sustained move above Rs 8,750 is required to improve the outlook. LME base metals were mixed as the stronger dollar and volatile technology shares weighed on sentiment. Copper fell below $13,400 per tonne, its lowest level since July, and posted a fifth consecutive weekly decline, its longest losing sequence in almost two years. Unease surrounding the AI investment cycle intensified following Huang's exit, leaving copper approximately 9 percent below its September record. Aluminium declined around 2 percent to finish near $3,000 per tonne as broader macroeconomic pressure outweighed evidence of physical tightness, including lower LME inventories and an elevated nearby premium.

Zinc and lead recorded modest gains.

Attention now turns to Fed Chair Kevin Warsh's scheduled remarks

, October US retail sales, the minutes of the October FOMC meeting and speeches from several policymakers. Fed commentary will be relevant in determining whether December rate-hike expectations strengthen or moderate. For metals, the near-term bias remains cautious. Stronger retail sales or hawkish Fed commentary could reinforce expectations of a December increase, keeping the dollar and real yields elevated and pushing gold towards $3,800 and silver towards $47. Softer data or less hawkish policy guidance could moderate tightening expectations and support a recovery towards $4,000 and $51, respectively.

Nvidia's earnings will be the next gauge of AI sentiment, with direct implications for copper. Geopolitical risk will remain the decisive driver for crude. Iran's attempted drone attack on a US installation in Bahrain has raised the risk of renewed retaliation, while tanker incidents and threats to Saudi infrastructure keep physical supply concerns elevated. Qatari mediation and the planned Trump-Putin-Xi meeting offer a potential route to de-escalation, but the balance remains fragile as a diplomatic breakthrough could send Brent back below $90, while further attacks on Gulf assets could quickly drive it above $100.