Slump in commodities rattles global markets

Commodity

Summary:

Global markets were rattled as gold, silver, oil, and metals plunged on fears of a more hawkish Fed under Kevin Warsh, boosting the dollar and triggering equity selloffs worldwide.

Commodities markets slumped on Monday, led by deep losses in gold, silver, oil and industrial metals, as a selloff unleashed by President Donald Trump's choice of Kevin Warsh for the next U.S. Fed chair sent precious metals tumbling for a second session.

Losses spilled over ‌into equity markets as investors ditched other assets to cover any precious metals losses. Global stocks fell for a third straight day, led by steep declines across Asia and in Europe, where basic resources stocks came under heavy fire.

MSCI's All-World index (.MIWD00000PUS), opens new tab was down 0.5% on the day, having fallen 1.5% since January 27's record high.

Investor nervousness was also reflected in a renewed rise in the VIX volatility index (.VIX), opens new tab, which nudged at the 20-level that many view as a sign of heightened market tensions.

Gold slid 5% to its lowest in more than two weeks, ‌while silver fell more than 7%. Both metals hit records last week.

Oil , dropped nearly 5%, easing from multi-month highs, and London Metal Exchange copper fell 3%.

On Friday, Trump named Warsh, a former governor of the Federal Reserve, to succeed Jerome Powell as head of the central bank in May. The choice sparked selling across financial markets.

Wall Street's main indexes closed lower on Friday. The Dow Jones Industrial Average fell 0.36%, the S&P 500 (.SPX) 0.43% and the Nasdaq Composite (.IXIC) 0.94%.

Trump's choice of ‍Warsh upended the idea that Powell's replacement would push for aggressive monetary easing and lifted the dollar, which, when it rises, makes commodities more expensive for holders of other currencies, hitting demand.

Though he now advocates for rates to be lowered, Warsh had a reputation as an inflation hawk in his earlier stint at the Fed.

"The decision by markets to sell precious metals alongside U.S. equities suggests investors ⁠view Warsh as more hawkish," said Vivek Dhar, a commodities strategist at Commonwealth Bank of Australia.

A hawkish Fed signals interest rates will stay higher for longer, supporting the ‍dollar and raising the opportunity cost of holding gold and silver, dimming their appeal.

"A stronger U.S. dollar is also adding pressure on precious metals and other commodities, including oil and base metals," ‌added Dhar, ‌who is sticking with a gold price forecast of $6,000 in the fourth quarter, however.

PRECIOUS METALS SELLING ACCELERATES ON MARGIN HIKES

The decline began on Friday, with the steepest one-day drop in spot gold since 1983, for a fall of more than 9%, while silver plunged 27% in its largest daily decline on record.

Selling in precious metals accelerated as CME Group hiked margins on its metal futures, with effect from Monday's market close.

An increase in margin requirements is generally negative for affected contracts, as the higher capital outlay can dampen speculative ⁠participation, reduce liquidity, and push traders to ⁠unwind positions.

"The scale of the unwind unfolding in gold today is something I haven't witnessed since the dark days of the 2008 global financial crisis," said IG market analyst Tony Sycamore.

Prices in energy markets, meanwhile, came under pressure on Monday from signs of de-escalation in U.S.-Iran tension after Trump's weekend comments that Iran was "seriously talking" with Washington, easing fears of conflict with the OPEC member.

Those comments, along with reports that ‍the naval forces of Iran's Revolutionary Guards have no plans for live-fire exercises in the Strait of Hormuz, are signs of de-escalation, Sycamore added.

Copper and iron ore markets faced headwinds amid worries over high inventories and subdued demand in the run-up to this month's Lunar New Year break in China, the world's biggest buyer of industrial and bulk metals.

The end-user demand and transactions are expected to be sluggish before the holiday, which starts on February 15, analysts said.

In other commodities, Tokyo rubber fell nearly 3% ‍while Chicago wheat and soybeans were down about 1%.

"The key question is whether this marks the start of a structural downturn in commodity prices or merely a correction," said CBA's Dhar.

"We see it as a correction and a buying opportunity rather than a fundamental shift."

Source: reuters

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Catherine Richards

Traders' Opinions

Data Interpretation

Economic

Central Bank

Forex

Commodity

China–U.S. Trade War

A nearly 9% drop in copper prices over the last two trading sessions marks a sharp return to reality for a market that analysts say had surged far ahead of its underlying fundamentals.

The recent rally, which pushed copper to a record high of $14,527.50 per metric ton last Thursday, appears unsustainable when measured against weak demand, rising stockpiles, and the prospect of increased supply.

Fundamentals Clash With Speculative Highs

Analysts argue that the recent price action was driven more by speculative momentum than by market realities. "Prices had moved way beyond fundamentals, pushed up by investors crowding into the market," said Macquarie analyst Alice Fox, who noted the global market was in a surplus of around 600,000 tons last year.

According to Fox, copper prices remain too high and would need to fall below $11,000 a ton to accurately reflect the current supply-and-demand balance. Even at last week's peak, prices were well above the levels considered necessary to incentivize new production investments.

The correction began swiftly. On Monday, copper hit a three-week low of $12,414.50, tumbling 9% from its recent peak. The slide was partly triggered by a stronger U.S. dollar, which gained after President Donald Trump appointed Kevin Warsh as the next Federal Reserve chair.

Macro Pressures and Waning Demand

The broader economic picture also fails to support the case for bullish copper prices. Tariffs and trade tensions under the Trump administration have pressured global manufacturing activity over the past year. While factory output in some regions expanded in January, the growth came from a low base after months of contraction, offering only tentative reassurance.

Further weighing on demand is China's upcoming Lunar New Year holiday in mid-February. The event will bring industrial activity to a standstill in the country, which consumes over half of the world's copper, estimated at 26 million tons this year.

Rising Supply and Swelling Inventories

While much of last year's price gains were fueled by supply disruptions from accidents in Indonesia and Chile, the supply landscape is changing. Production ramp-ups at mines in Zambia and Mongolia are expected to bring more copper to the market this year.

This outlook is echoed by StoneX analyst Natalie Scott-Gray. "While we forecast copper in a deeper deficit market year on year, we still do not see the market as historically out of balance," she said. Scott-Gray added that while supply risks exist, "fundamentals certainly do not support copper at current levels."

The most telling sign of weak demand is the dramatic increase in stockpiles. Inventories in warehouses registered with the London Metal Exchange (LME), Shanghai Futures Exchange (SHFE), and Comex have more than doubled since August, now totaling over 930,000 tons. This glut of metal suggests that consumption is not keeping pace with availability, signaling the potential for further price declines.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Economic

Remarks of Officials

Data Interpretation

Global factory activity showed signs of a turnaround in January, fueled by a strong performance from key Asian exporters and a return to output growth in the eurozone. Private surveys suggest the economic drag from U.S. tariffs may be starting to fade, offering a cautiously optimistic outlook for world trade.

The International Monetary Fund recently raised its 2026 global growth forecast, citing receding tariff concerns and a sustained boom in AI investment that has boosted both asset values and productivity expectations. This improved backdrop appears to be translating into stronger demand for manufactured goods.

Asian Export Hubs Lead the Charge

Manufacturing sectors across Asia reported a notable pickup in activity, driven by rebounding overseas demand. According to Shivaan Tandon, Asia Economist at Capital Economics, "Exports from most countries have surged in recent months, and we think the near-term outlook for Asia's export-oriented manufacturing sectors remains favourable."

China's Factory Activity Expands

The RatingDog China General Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, climbed to 50.3 in January from 50.1 in December. This marks its highest level since October and sits above the 50-point threshold that separates growth from contraction. The upbeat survey, which noted a rebound in export orders, contrasts with an earlier official report that showed activity faltering. China's export strength was a key factor that helped its economy grow by 5.0% last year, offsetting weaker domestic consumption.

Japan and South Korea Hit Milestones

Japan and South Korea, two of the region's industrial powerhouses, saw manufacturing growth accelerate to multi-year highs.

• Japan: The S&P PMI reached its strongest level since August 2022, bolstered by solid demand from the U.S. and Taiwan. Annabel Fiddes, an economics associate director at S&P Global Market Intelligence, noted, "Japan's manufacturing industry propelled itself back into growth territory at the start of 2026, with firms signalling the strongest upturns in output and new orders for nearly four years."

• South Korea: The country's PMI rose to its highest reading since August 2024.

Elsewhere in Asia, Taiwan's PMI increased to 51.7 from 50.9, and Indonesia's rose to 52.6 from 51.2. Meanwhile, India's manufacturing activity also saw a slight improvement, though it did not significantly boost hiring or business optimism.

Eurozone Output Returns to Growth

The eurozone's manufacturing sector also showed tentative signs of bottoming out. The HCOB Eurozone Manufacturing PMI rose to 49.5 in January from a nine-month low of 48.8 in December.

Critically, the output component of the index climbed back into expansion territory, rising to 50.5 from 48.9 a month earlier. Germany, the bloc's largest economy, saw its factory output return to growth after a contraction in December, while France recorded its fastest pace of output expansion in nearly four years.

However, the recovery remains fragile. The broader manufacturing sectors in Germany, Spain, Italy, and Austria all remained in contraction. Paolo Grignani, a senior economist at Oxford Economics, offered a sober assessment: "While it is too early to say, today's PMI might signal the start of converging growth rates... All in all, the European manufacturing sector remained in the doldrums at the start of the year."

Outside the EU, Britain's manufacturing PMI climbed to its highest point since August 2024, with new orders expanding at the fastest rate in almost four years.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Commodity

Market Overview

Crude oil prices dropped quickly after geopolitical tensions eased, leading investors to rethink risks in energy markets. WTI crude fell 4 to 5 percent to about $61.50 to $62.50 per barrel, one of the biggest single-day drops in recent months. This move brought prices down from January highs of around $66 to $71.

This drop shows how quickly the extra price from supply fears, especially around major shipping routes, disappeared. As tensions eased, traders started paying more attention to basic market factors again.

OPEC+ kept production steady, and forecasts still suggest there will be plenty of global supply and slower demand growth in 2026. Natural gas prices also fell, showing less volatility across the energy sector.

Natural Gas Price Forecast: Holds $3.60 After Sharp Pullback Inside Rising Channel

Natural Gas (NG) Price Chart

Natural gas futures are trading around $3.64 per MMBtu after a strong rally stopped at the top of the rising price channel on the 4-hour chart. Recent candles show small indecision bars near $3.70, followed by a slight pullback, which suggests buyers are pausing instead of leaving the market quickly. The price is still above the $3.55 to $3.60 support zone, which matches the channel midline and short-term trend.

The overall trend is still positive since the price is above the 50-EMA, and the 200-EMA near $2.60 is still rising, which supports the medium-term uptrend. The RSI has dropped to about 55, moving away from overbought levels and leaving room for another move higher if momentum returns. If the price breaks above $3.75, it could head toward $4.30, but if it closes below $3.55, it may signal a deeper pullback.

Trade idea: Consider buying on dips near $3.55, aiming for a move up to $4.20, but this idea is invalid if the price falls below $3.40.

WTI Oil Price Forecast: USOIL $61 Break Tests Bull Channel as Momentum Slips

WTI Price Chart

WTI crude oil has dropped to about $61.60 after it could not stay above the top of the rising price channel from late January. On the 2-hour chart, several strong bearish candles pushed the price below the channel midline and the 50-EMA, showing that upward momentum is weakening instead of fully reversing.

The price is now testing support between $62.10 and $61.50, which also matches a minor Fibonacci retracement from the recent move up. If the price falls below this area, it could drop to $60.20 and then $58.90, which is the lower channel support.

On the other hand, $63.70 and $64.80 are still important resistance levels. The RSI is now below 40, which means sellers are in control, but they are not yet showing signs of exhaustion.

Trade idea: Consider buying if the price bounces near $61.50 for a short-term move up to $63.70, or look to sell if the price drops clearly below $60.20.

Brent Oil Price Forecast: UKOIL Slips Below $66 as Rising Channel Breaks

Brent Price Chart

Brent crude is trading around $65.70 after being strongly rejected at the top of the rising channel that has guided prices since late January. On the 2-hour chart, several large bearish candles pushed the price below the channel midline and the 50-period EMA, showing that buyers have lost control of the short-term trend.

This breakdown also pulled the price below the $66.80 to $67.00 support zone, which is now acting as near-term resistance. If the price keeps falling, the next support levels are $64.25 and then $62.90, which match previous demand areas and the lower trend line. The RSI is near 35, showing strong bearish momentum, but there is not yet a sign of a bounce.

Trade idea: Consider selling if the price rallies toward $66.80, aiming for a target near $64.30, or wait for the market to stabilize before looking for buying opportunities.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

James Riley

Economic

Political

France is poised to approve its 2026 budget on Monday, ending a period of intense political instability that has defined President Emmanuel Macron's government since his 2024 snap election resulted in a hung parliament. The budget's passage, secured by the expected failure of two no-confidence motions, provides a much-needed reprieve for Prime Minister Sebastien Lecornu’s weak minority government.

For nearly two years, budget negotiations have paralyzed French politics, coming at a time when a major hole in public finances demanded urgent belt-tightening. The prolonged deadlock cost two prime ministers their jobs, rattled debt markets, and raised concerns among France's European partners.

A Hard-Fought Budget Ends Political Paralysis

Prime Minister Lecornu, whose chaotic appointment in October was widely criticized, has managed to navigate the political impasse by securing the support of Socialist lawmakers. This breakthrough, achieved through targeted but expensive concessions, has boosted his political standing.

The newfound stability has been welcomed by investors. The premium on French government debt over the German benchmark has returned to levels last seen before Macron's snap election announcement in June 2024, signaling a return of market confidence.

With the Socialists confirming they will not back the no-confidence motions, the long-overdue 2026 budget is finally set to become law. Veteran political commentator Alain Duhamel summed up the outcome on RTL radio, calling it "a political success and an economic failure," highlighting the trade-offs made to end the gridlock despite a projected budget deficit of 5% of GDP.

The Price of Stability: Key Reforms on Hold

The government paid a steep price for the Socialists' support. The most significant concession was the suspension of an unpopular pension reform, which delays the planned increase in the retirement age to 64 until after the 2027 presidential election.

This move effectively stalls Macron’s signature push for supply-side economic reforms. With just over a year left in his second term and historically low approval ratings, his domestic agenda has lost momentum. Lawmakers show little appetite for unpopular spending cuts as the election cycle intensifies.

However, Macron’s allies argue that Lecornu’s flexible approach prevented the return of wealth taxes and protected the president's legacy of making France more attractive to foreign investment.

Macron Pivots to the World Stage

Having lost control of the domestic agenda, President Macron is now focusing almost exclusively on foreign policy. He is championing a more self-reliant Europe and advocating a firmer stance in confronting U.S. President Donald Trump on issues ranging from tariffs to the Greenland crisis.

At home, however, his centrist political bloc appears significantly weakened and lacks a clear successor.

All Eyes on the 2027 Presidential Race

Several figures from Macron's camp are already preparing for the 2027 presidential race, including two former prime ministers, Edouard Philippe and Gabriel Attal. Prime Minister Lecornu has also seen his popularity rise in recent months.

The risk for the centrists is fragmentation. With no primary planned, it remains uncertain if a mainstream candidate can consolidate enough support to reach the second round of the election. This situation could create a major opening for the resurgent far right, whether it is led by Jordan Bardella or Marine Le Pen.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

The pound held steady against the dollar on Monday near a multi-year high hit last week as attention focused on a Bank of England policy announcement on Thursday.

Sterling was last up less than 0.1% versus the dollar at $1.3696. It hit $1.3867 last week, its highest since September 2021, but retreated on Friday as the U.S. currency strengthened after U.S. President Donald Trump nominated Kevin Warsh to lead the Federal Reserve.

Against the euro, the pound was little changed at 86.61 pence.

BANK OF ENGLAND SET TO HOLD

Attention this week is on the BoE, with the central bank expected to hold its benchmark interest rate at 3.75% when it announces policy on Thursday, according to all but two economists surveyed by Reuters in a January poll.

Data has remained robust since the last meeting when the central bank lowered the Bank Rate, while inflation remains the highest among Group of Seven industrialised peers, suggesting that the BoE can hold off from cutting rates for now.

The last two meetings have seen rate-setters deeply divided, but the decision this time should be more straightforward.

"This week we could, for once, have a boring Bank of England meeting," said Mohamad Al-Saraf, FX and fixed income associate at Danske Bank, who expects the central bank to keep the interest rate on hold.

"We don't expect something major in terms of market reaction, and we don't believe it will have major implications for the pound."

Sterling steady near $1.37 as eyes turn to BoE announcement_1

A line chart with the title 'How inflation in the UK has moved'

MANUFACTURING IMPROVING

A closely watched barometer of the health of Britain's manufacturing sector, the S&P Global Manufacturing Purchasing Managers' Index, rose to its highest since August 2024 last month, a survey showed on Monday, adding to signs of a pick-up in the economy after a sluggish end to 2025.

"We take encouragement from how stable the PMI has been in recent months, with the output index holding above 51.0 for three of the past four months," said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, in an emailed note.

"A broad improvement in the PMI's sub-indices in January also provides us with further encouragement that the steady momentum seen in recent months can be maintained."

The data had little impact on expectations for BoE policy, with money market traders fully pricing in just one quarter-point rate cut in 2026, and around a 50% chance of a second.

Source: reuters

Risk Warnings and Disclaimers

Add to Favorites

Ukadike Micheal

Russia-Ukraine Conflict

Remarks of Officials

Political

Energy

A temporary truce on energy infrastructure strikes between Russia and Ukraine is facing severe strain, as Ukrainian President Volodymyr Zelenskiy confirmed that facilities in frontline areas continue to come under fire.

While Russia has not conducted targeted missile or drone attacks on Ukraine's energy grid in the last 24 hours, Zelenskiy’s comments on Monday underscore the limited scope of the agreement, which was brokered last week at the request of U.S. President Donald Trump.

Ukrainian President Volodymyr Zelenskiy addresses the ongoing conflict and energy situation.

Energy System Remains Under Pressure

According to Zelenskiy, repair crews have successfully restored power facilities damaged by both frequent Russian attacks and recent malfunctions in high-voltage lines over the weekend.

"The (energy) system is operating stably," he stated on the Telegram app. "However, given the extremely cold weather and the impact of Russian strikes, all challenges remain serious."

This fragile stability is further threatened by what Zelenskiy described as a shift in Russian military focus toward transport logistics, particularly railway infrastructure.

Disputed Timelines and Diplomatic Friction

The terms of the truce itself remain a point of contention between Kyiv and Moscow. The Kremlin stated that Russian President Vladimir Putin agreed to a personal request from Trump to halt strikes on Kyiv until February 1.

However, Zelenskiy asserted that the agreement was intended to be a week-long truce that began on January 30, highlighting a fundamental disagreement on the timeline.

Civilian Casualties Continue to Mount

Despite the pause in targeted energy strikes, attacks on other civilian and industrial sites persist. On Sunday, a Russian drone strike killed 12 miners at a coal mine in Ukraine’s Dnipropetrovsk region. Energy company DTEK reported on Monday that one of its mining enterprises in the same region was attacked for the second time in 24 hours.

In the frontline Donetsk region, regional officials confirmed that a Russian strike killed a father and son, while also wounding two children and their mother.

As the conflict continues, both Kyiv and Moscow are preparing for talks scheduled for Wednesday and Thursday in Abu Dhabi, where discussions on how to end the war are expected to take place.

Risk Warnings and Disclaimers

Add to Favorites