US Inflation Data, Geopolitical Tensions to Put Commodity Markets to the Test

Global Markets Navigate Turbulent Week Amid Conflicting Signals

Global markets experienced a rollercoaster ride in the week ended April 2, with sentiment oscillating between optimism and anxiety due to conflicting signals from Washington and Tehran. The US dollar maintained its strength, closing above 100 for the second consecutive week, as heightened uncertainty in West Asia supported the greenback. The dollar traded in a choppy range of 99.3-100.6, reflecting the mixed tone of the conflict.

The US economic data, including labour market indicators, ISM Manufacturing PMI, and retail sales, reinforced the "higher-for-longer" interest rate narrative, keeping US Treasury yields supported. Meanwhile, Wall Street staged a relief rally, with major benchmarks gaining 3-4 percent, marking their first weekly advance since the onset of the Iran conflict.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Gold and silver experienced significant volatility, driven by shifting geopolitical cues and movements in the dollar and bond yields. Early sentiment was cautious, with the US-Iran conflict showing little sign of resolution. However, optimism around potential de-escalation, supported by signals from Tehran and reports of a possible scaling back of US military involvement, lifted prices, with gold climbing to a two-week high of $4,790 per ounce and silver surging above $76 per ounce. This momentum proved short-lived.

Trump's remarks, which simultaneously hinted at a possible resolution and warned of intensified military action ahead, injected fresh uncertainty, sending gold back down to around $4,558 per ounce and silver below $70 per ounce. Both metals recovered into the close, finishing the week up over 4 percent, with gold near $4,700 per ounce and silver around $73 per ounce. Still, the near-term outlook remains uncertain, with precious metals caught between fluctuating rate-cut expectations and an unresolved geopolitical backdrop.

Base metals were mixed, with aluminium and zinc outperforming (+2 percent each), while copper posted modest gains to around $12,360 per tonne. De-escalation hopes offered some support, but persistent geopolitical uncertainty kept volatility elevated.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Crude oil stayed highly reactive to geopolitical headlines. Initial comments from Trump, implying a possible US pullback from the Iran conflict within two to three weeks, briefly weighed on prices. Those hopes were quickly offset by news of US aircraft carrier deployments and extra troops in West Asia, reinforcing the risk of a prolonged confrontation.

WTI surged to $114 per barrel, closing the week up around 12 percent, while Brent held near $109 per barrel as markets are pricing in a growing risk of sustained supply disruptions, particularly around the Strait of Hormuz. Easing concerns over a potential US crude export ban, combined with ongoing physical supply and shipping bottlenecks, kept WTI relatively well-supported.

On the macro front, US non-farm payrolls rose by 1,78,000 in March 2026, marking the strongest job growth since late 2024 and reversing February's weakness. This points to a resilient labour market and further reduces the likelihood of near-term Fed rate cuts. Looking ahead, markets will closely watch FOMC meeting minutes, Core PCE inflation, final GDP estimates, and CPI for further clues on the policy outlook. With Iran rejecting the US 48-hour ceasefire proposal and signaling a harder line, geopolitics are likely to stay the dominant driver of risk sentiment in the near term.