On the upside, the partial easing of tariff tensions between the US and China and the White House’s appointment of Kevin Warsh as the next chairman of the US Federal Reserve have impacted dollar and overall risk sentiment. A stronger trading backdrop and clearer policy expectations tend to help stabilize markets.On the other hand, the geopolitical risks are still high. Global risk indicators continue to show heightened concerns about inter-state tensions and geo-economic confrontations through 2026. Such uncertainty could keep volatility high in commodity markets – even as spot prices take a breather.
Meanwhile, China’s latest manufacturing PMI slipped back into contraction territory in January. This points to weaker demand in the short term. Still, long-term themes such as electrification, electric vehicles and the expansion of data centers continue to support demand for various metals. –
Bullion: A positioning reset, not a trend reversal
Gold and silver were extremely volatile in January. Both reached new highs early in the month before a sharp sell-off later in January. The main trigger was the appointment of Kevin Warsh as Fed chairman, which pushed the dollar higher and led to rapid profit-taking in precious metals. –
Prices recovered in early February as bargain hunters stepped in, showing that underlying demand for precious metals is still intact. But the episode made clear that gold and silver remain highly sensitive to policy signals and currency movements. Despite the recent turbulence, the long-term bullish case for gold is still strong. Central banks continue to buy heavily, geopolitical risks remain high and expectations of rate cuts support the metal. However, as markets adjust to new expectations about the Fed, corrections could become deeper and more frequent
Base metals: supply shortage meets a softer China
Base metals such as copper, aluminum and nickel rose sharply in early 2026 due to tight supply conditions and strong demand from energy transition themes. Copper came close to record highs, and other metals recovered as smelter disruptions and policy changes hit production.
Forecasts indicate that the copper market could face a shortage of 1 million tonnes by 2026. This remains a strong driving force in the medium term. But in the short term, momentum has waned. LME stocks rose in January, easing the immediate tightness.
China, the world’s largest consumer of base metals, posted a manufacturing PMI of 49.3 in January, indicating a contraction. Weak new orders and export demand indicate a cautious near-term outlook. -term prospects.
Trade tensions have eased slightly, with both the US and China adjusting certain tariffs and expanding exclusions. This can reduce costs for some industrial inputs. But this is not a complete reset of trade relations; policy risks remain.
Energy: crude oil under pressure, gas more constructive
The energy markets have followed different paths. Natural gas prices rose due to cold weather and strong energy demand. However, crude oil remained weak as the market is well supplied.
The IEA’s recent report shows that global inventories are increasing, and prices fluctuated in January, mainly due to supply disruptions and geopolitical headlines. The broader message is clear that supply is growing steadily and demand growth is modest. This supports the view that crude oil could remain in a “reset” phase.
Tariff easing plays only a minor role in energy markets, mainly through macro effects. If the dollar strengthens, it could put additional pressure on oil prices in the short term as crude oil is priced in dollars.
Outlook: Likely multi-week consolidation, no reversal
The commodity outlook points to a multi-week consolidation rather than a major reversal as markets absorb several factors such as the Fed’s succession and its impact on the dollar, limited rate relief amid lingering policy uncertainty, China’s weaker PMI and lingering geopolitical risks. Even with this slowdown, the medium-term outlook remains positive for certain commodities. A structural copper shortage, robust demand for natural gas and the value of gold as a geopolitical hedge support long-term resilience once the correction stabilizes. Rate relief provides only modest support, and is potentially temporary, while heightened geopolitical tensions continue to drive volatility and demand for safe havens. A stable or stronger dollar could limit near-term gains, but overall conditions point to a broad reset, rather than the start of a downturn. Consolidation this week rather than a major reversal as markets absorb several factors, the longer-term outlook remains positive for select commodities. A structural copper shortage, robust demand for natural gas and the value of gold as a geopolitical hedge support long-term resilience once the correction stabilizes. Rate relief provides only modest support and may be temporary, while heightened geopolitical tensions continue to drive volatility and demand for safe havens. A stable or stronger dollar could limit near-term gains, but overall conditions point to a broad reset and not the start of a downturn.
(The author, Hareesh V, is Head of Commodity Research at Geojit Investments Limited)
(Disclaimer: Recommendations, suggestions, views and expert opinions are their own. These do not represent the views of the Economic Times)
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