The upcoming week is set to be pivotal for commodities, with oil prices surging and major central bank decisions on the horizon. The US Federal Reserve is expected to hold rates steady on Wednesday, but investors will closely watch Chair Kevin Warsh’s signals regarding a potential December move. Meanwhile, the European Central Bank and Bank of Japan will also make policy announcements, adding to the uncertainty.
Markets ended last week in a volatile state, caught between an AI-driven sell-off in equities and a rally in oil prices that reignited inflation concerns. The dollar index fluctuated between 101.4 and 102, closing near 101.8, as investors balanced inflation worries with a flight to bonds. The 10-year Treasury yield saw its biggest one-day drop in over two years, falling below 5 percent, while the odds of an October Fed hike plummeted below 10 percent. The sell-off was triggered by Meta’s announcement of increased AI spending and its first quarterly negative free cash flow, which sent its shares tumbling.
Precious metals failed to benefit from the decline in Treasury yields, with gold dropping below $4,000 an ounce for the first time since July, closing at $3,978 and losing about 4 percent on the week. Silver slid more than 5 percent to near $54 an ounce, a low last seen in November 2025. The sell-off was driven by broad-based liquidation rather than interest-rate expectations, as investors reduced exposure to AI and technology stocks, selling gold to meet margin requirements. Silver faced additional pressure due to its industrial-demand exposure.
Base metals also experienced choppy trading, with copper falling to a five-week low of $14,031 per tonne before rebounding to close above $14,320. Supply worries eased as LME stocks rose to their highest since July, and cancelled warrants dropped to their lowest since May. Zinc and aluminium showed resilience, supported by tighter inventories, while lead benefited from a decline in Shanghai Futures Exchange stocks. Brent crude settled just below $117 a barrel, up over 6 percent on the week, driven by Houthi attacks on Saudi Arabia, including strikes on key oil infrastructure. The rally in oil prices has reinforced expectations that US rates may remain higher for longer.