Commodity Volatility Expected to Persist Amid Hormuz Uncertainty and Upcoming Economic Data Releases

Global Commodity Markets Navigate Delicate Balance Amid Geopolitical Tensions

The week ended April 24 was marked by a delicate balance between escalating geopolitical risk and tentative diplomatic progress, with tensions surrounding the Strait of Hormuz continuing to shape investor sentiment.

The dollar posted its first weekly gain in three weeks, up around 0.3 percent, as a potential US–Iran ceasefire and a 10-day truce between Israel and Lebanon signaled near-term stabilization in the region. However, the advance was capped by the ongoing uncertainty surrounding the Strait of Hormuz. Macro data offered a mixed backdrop, with consumer sentiment falling to its lowest level in decades at 49.8 on the University of Michigan index, while manufacturing and services PMIs surprised to the upside.

Fed Expected to Hold Rates Unchanged, US Equities Extend Strong Performance

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The Federal Reserve is widely expected to hold rates unchanged at its meeting next week, and markets have now priced out any cuts for the remainder of the year. US equities, meanwhile, extended their strong performance, with the S&P 500 and Nasdaq Composite both reaching record highs, marking a fourth consecutive week of gains, supported by renewed optimism that Pakistan-mediated US–Iran discussions could help ease tensions.

Precious Metals Bear Brunt of Hawkish Repricing

Precious metals bore the brunt of the hawkish repricing, with gold shedding around 3 percent on the week to close near $4,710 an ounce, while silver fell harder, dropping roughly 7 percent to close below $76 an ounce, weighed down by a firmer dollar, rising Treasury yields, and an energy-driven inflation pulse that has pushed rate cut expectations firmly off the table.

Current Gold and Silver Rates

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Gold Futures Trading in Sideways to Slightly Bullish Range

Gold Futures (MCX) is currently trading in a sideways to slightly bullish range, showing signs of consolidation after a sharp recovery from lower levels. Prices are holding above key short-term supports, indicating that dips are being bought, while repeated attempts to move higher suggest gradual strength building.

Key Support and Resistance Levels

Base Metals Tell Nuanced Story

Base metals told a more nuanced story, with aluminium and zinc moving higher on the back of supply-side constraints, while copper's week was choppier. Despite a price recovery, elevated exchange inventories continue to cast doubt on whether Chinese restocking reflects genuine demand revival or simply precautionary stockpiling.

Crude Oil Remains Week's Most Volatile Segment

Crude oil remained the week's most volatile segment, with Brent surging above $107 a barrel and WTI edging closer to $98 a barrel before closing the week with 16 percent and 13 percent gains respectively as the near-closure of the Strait of Hormuz showed no sign of resolution.

Energy Security Threat Underlines Disruption

The scale of the disruption was underscored by International Energy Agency Executive Director Fatih Birol, who warned that as much as 13 million barrels per day may already be offline, describing the situation as the most severe energy security threat in history.

Volatility to Persist in Week Ahead

Looking ahead, volatility is likely to persist, with the White House confirming that envoys Steve Witkoff and Jared Kushner were travelling to Pakistan for talks, only for Tehran to deny that any direct engagement had been scheduled. This recurring pattern, where optimism is quickly tempered by conflicting signals, continues to define the current geopolitical landscape.

Macro Calendar to Bring Hawkish Surprise

The week ahead brings a dense macro calendar, including US GDP, PCE inflation, ISM Manufacturing, and policy decisions from the Federal Reserve, Bank of England, and Bank of Japan. Any hawkish surprise could extend the pressure on gold and base metals. However, as long as the situation in the Strait remains unresolved, and Washington and Tehran continue to send conflicting signals, markets are likely to remain highly sensitive to developments emerging from Islamabad.