Russia-Ukraine Peace Talks and FOMC Minutes to Influence Commodity Markets This Week

A delay in the implementation of US reciprocal tariffs, along with optimism surrounding a potentially lower-than-expected Personal Consumption Expenditure (PCE) reading, helped ease market concerns in an otherwise volatile week. The US dollar fell to a two-month low of 106.57, registering a 1.2% decline for the week. This decline was driven by disappointing retail sales data, a delay in reciprocal tariffs, and a pullback in US Treasury yields.

The 10-year Treasury yield, which had initially surged to 4.66% following the Consumer Price Index (CPI) report, reversed all gains after the Producer Price Index (PPI) report. Certain PPI components, which influence the PCE, softened, reinforcing expectations of a weaker PCE reading and raising hopes for interest rate cuts. As a result, money markets have now priced in approximately 40 basis points of Federal Reserve rate cuts for 2025. This shift in sentiment boosted US equities, with the Dow Jones, Nasdaq, and S&P 500 posting solid weekly gains, bringing the S&P 500 close to its record high.

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Precious Metals

Gold: COMEX Gold extended its winning streak for the seventh consecutive week—the longest since August 2020—reaching a record high of $2,968.50 per troy ounce. Despite a sharp pullback on Friday, gold closed the week with marginal gains, hovering around $2,900 per troy ounce.

Gold’s strength was supported by increased safe-haven demand amid rising trade tensions, particularly after President Trump announced reciprocal tariffs on countries taxing US imports, heightening inflation concerns. Additionally, weaker US retail sales and increasing expectations of Federal Reserve rate cuts further strengthened gold’s appeal. While Fed Chair Jerome Powell acknowledged progress in curbing inflation, he emphasized that restrictive monetary policies would remain in place until inflation approaches the 2% target. Given ongoing trade uncertainties and inflation risks, gold prices may continue to find support in the near term.

Silver (MCX): MCX SILVER March futures surged on Friday, reaching a three-month high of ₹98,199 per kg before pulling back to close at ₹95,564. The price remains above the Supertrend (7,3) and the 20-day EMA, indicating a bullish bias.

• Resistance Levels: ₹98,800 (initial), followed by ₹99,900
• Support Levels: ₹92,800 (initial), followed by ₹91,700

Crude Oil: WTI crude oil declined for the fourth straight week, as concerns over the cancellation of the Gaza ceasefire agreement eased and President Trump engaged in discussions with Russia to end the Ukraine war. However, oil prices briefly surged earlier in the week, reaching $73.70 per barrel—the highest level this month—due to concerns over tighter sanctions on Russia and Iran, as well as the potential breakdown of the Gaza ceasefire.

Despite these temporary gains, oil prices are likely to remain under pressure due to signs of an easing physical market, with WTI’s prompt spread moving closer to parity.

Key Events to Watch

Federal Reserve Outlook: Markets are now awaiting the release of the Federal Open Market Committee (FOMC) meeting minutes, as mixed inflation data and weaker retail sales have complicated the Fed’s decision-making process. While Fed Chair Powell and other officials have signaled no rush to cut rates, markets will closely watch upcoming economic data for further clues.

Flash PMI: Investors will monitor this report for early indications of February’s economic activity.
Interest Rate Expectations: Money markets have priced in about 40 basis points of Fed rate cuts for 2025.

Geopolitical Developments

A crucial meeting between top officials from the US, Ukraine, and Russia in Saudi Arabia could have significant implications for market sentiment. A successful resolution to the ongoing conflict may weigh on gold and oil prices while boosting riskier assets such as equities.