Inflation Retreat Meets Geopolitical Tension: Commodity Markets Face New Volatility

US inflation coming in below expectations while Middle East tensions rise is pulling commodity markets in opposite directions.

The Fed’s Signal: Rate Expectations Ease

■US CPI fell 0.4% monthly and rose 3.5% yearly, missing forecasts.

■PPI dropped 0.3% monthly but gained 5.5% yearly, also below expectations.

■Fed Chair Kevin Warsh emphasized zero tolerance for high inflation and a firm commitment to restoring price stability.

Gold and Silver: Safe Haven or Selling Pressure?

■Gold slipped as US‑Iran tensions kept oil prices high and markets priced in a longer‑lasting restrictive Fed stance.

■Silver, hit by energy‑linked inflation worries and a late‑week dollar rebound, became the hardest‑hit precious metal, down 6.6% on an ounce basis.

■Platinum and palladium each fell 2.2%, while gold declined 2.2%.

Oil: Geopolitical Risk Premium Surges at Hormuz

■Brent crude jumped 14.2% for its biggest weekly gain in 19 weeks, driven by escalating US‑Iran clashes and Hormuz supply worries.

■Reduced flow through the Strait of Hormuz amplified the geopolitical risk premium and physical supply anxieties.

■Saudi Arabia’s move to shift over 70% of its Hormuz‑exported crude via the East‑West pipeline to Yanbu intensified pressure on alternative routes.

■A draw of 1.7 million barrels in US commercial crude stocks and refinery utilization climbing to 96.2% further supported the rally.

Base Metals and Agriculture: Mixed Moves

■Nickel rose 2.3%, buoyed by uncertainty over Indonesia’s ore‑quota allocations and softer US producer inflation.

■Aluminum gained 0.7% on fears that Hormuz transport disruptions could curb Gulf output and shipments.

■Zinc slipped 2.4% as China’s property‑sector weakness threatened galvanized‑steel demand.

■Lead declined 0.7%, copper eased 0.2%.

■Grains: wheat up 7%, corn 1.6%, rice 1.3%, soybeans 1%.

Grains and Food: Black Sea Risks and US Outlook

■Black‑Sea shipment risks, fueled by rising Russia‑Ukraine attacks, underpinned wheat prices.

■Above‑average heat forecasts for the US Northern Plains bolstered corn and soy prospects.

■Coffee faced pressure after Brazil’s green‑shipments rose 14.4% year‑on‑year.

■Cocoa dropped 7.5% per tonne as EU grindings fell 4.6% to a six‑year low, while Nigerian exports jumped 30%.

■Cotton fell 3.6%, coffee 3.9%, sugar 0.4%.

Savaş Yıldırım: With US inflation data coming in softer than expected, Middle‑East geopolitical tension is creating a two‑way tug‑of‑war on prices. Investors anticipate the Fed will stay on hold despite low inflation, yet they cannot ignore the risk premium embedded in oil. This balance will keep commodity markets directionally volatile in the near term.