Particularly, US PMI data will be widely monitored for early clues on labor market health and economic momentum, as any weakening might support Fed rate-cutting views.
Markets Rebound Amid Uncertainty
Markets saw yet another tumultuous week (ending October 17), as traders assessed concerns over the state of US regional banks, allayed fears of a lengthy US federal shutdown, and reduced fears of further escalation in US-China trade hostilities.
After two US regional lenders, Western Alliance Bank and Zions Bank, said they had been impacted by either faulty or fraudulent loans, the dollar fell to 98 on concerns about issues in the larger banking industry. Trump blamed Beijing for the most recent trade stalemate, while China accused the US of inciting fear over its rare earth limits. The tense trade scenario further put pressure on the US dollar and US stocks. But Trump’s admission that his planned 100 percent tax on Chinese imports would not be viable and his announcement that he will meet with Chinese President Xi Jinping in South Korea in two weeks helped ease market anxiety. As a consequence, all three of the main US market indexes had gains of around 2 percent, while the dollar ended the week with slight falls at 98.5.
Gold, Silver See Volatile Swings
These events also had an impact on COMEX gold, which saw a steep decline from a record high of $4392 an ounce to less than $4200 an ounce. However, safe-haven bids spiked early in the week on banking fears, and they intensified further when Trump hinted at a partial decoupling from China, causing gold to close the week up 7%. This came as China escalated its tit-for-tat trade actions by imposing restrictions on five US companies connected to South Korea’s biggest shipbuilder, Hanwha Ocean Co. Despite a sharp 5% decline on Friday, mostly as a result of profit-taking after its historic surge to a record high of $53.76 per ounce, COMEX silver still ended the week with a 7% gain.
MCX GOLD futures have developed a Bearish Engulfing candlestick pattern on the daily chart. If the price breaks below Friday’s low of Rs 1,25,957 per 10 grammes, further declines may occur. Near Rs 1,23,650 and Rs 1,20,000 are the projected immediate supports. Although it would be too soon to declare a trend reversal, a short-term correction is expected if the price remains below Rs 1,25,957. On the upside, Rs 1,31,000 and Rs 1,32,300 are the first resistance levels.
Oil Slumps, Metals Mixed
Due to supply-demand fundamentals that are negative for 2025 and 2026, reducing geopolitical risk premiums, and increased US-China trade tensions, NYMEX oil prices fell to a five-month low of $56.6 per barrel and are down almost 8% so far this month. The IEA predicted a major supply surplus of 4 million barrels per day by 2026, citing increasing output and muted demand forecasts, which contributed to oil’s third consecutive week of losses.
Reflecting the continuous struggle between growing trade tensions and enduring supply restrictions, LME base metals closed the week in a mixed manner. Both copper and aluminum saw weekly increases of 0.85 percent and more than 1 percent, respectively. Midway through the week, market mood shifted to caution as additional export limits and tariff threats from the US and China shook the world’s appetite for risk and prompted profit-taking across the complex.
Focus Shifts to US Data
Risk-off flows and the partial US government shutdown, which restricted the publication of important economic data, put pressure on copper, which recently reached close to 16-month highs. Following Alcoa’s announcement that it was closing its alumina plant in Australia due to deteriorating bauxite qualities, aluminum prices continued to rise.
As the shutdown is expected to continue into its fourth week, all eyes will be on the Senate, which will vote on a resolution to break the standoff on Monday. A failure to approve the funding package by October 22 would result in the second-longest shutdown in US history. As markets wait for new hints about the Federal Reserve’s policy stance, attention is now shifting to the US inflation data, which has been delayed and is now anticipated on October 24.
There will be a lot of news this week, including flash PMI numbers from major global countries, UK inflation statistics, and important economic announcements from China. Particularly, US PMI data will be widely monitored for early clues on labor market health and economic momentum, as any weakening might support Fed rate-cutting views.