Commodity Outlook: Gold Faces Key Support Test as Oil, Copper and Fed Signals Take Centre Stage

Commodity Market Outlook: Commodity markets could remain volatile in the coming week as traders assess signals from the US Federal Reserve, movements in the dollar and bond yields, geopolitical developments, and fresh supply concerns across energy and industrial metals. Gold, crude oil and copper are likely to remain among the key commodities in focus.

After a turbulent week marked by a sharp sell-off in global bonds, weaker US economic indicators and major swings in precious metals, investors will now closely track the minutes of the Federal Open Market Committee (FOMC) meeting and comments from Federal Reserve officials.

Supply-related developments in crude oil and copper could add another layer of uncertainty.

Dollar and US Bond Yields Remain Key Drivers

The week ended October 2 saw considerable volatility across global markets. Heavy selling in bonds pushed US Treasury yields sharply higher, while the dollar strengthened.

The US 10-year Treasury yield climbed as high as 5.34%, according to the reported market data, while the dollar moved above the 102 level for the first time since April 2025 and touched around 102.2.

At the same time, weaker US economic numbers complicated expectations surrounding the Federal Reserve's next policy decision.

Core PCE inflation data released during the week came in weaker than expected. September payroll growth was also reported at just 29,000, significantly below forecasts of roughly 84,000 to 90,000.

The unemployment rate increased to 4.2%, while July and August employment numbers were revised lower by a combined 60,000 jobs.

Weak US Jobs Data Changes Fed Rate Expectations

Wage growth also appeared to lose momentum. Average hourly earnings increased by only 0.1% in September, while annual wage growth slowed to around 3%, reportedly the weakest pace since 2021.

Following the employment report, expectations surrounding the Federal Reserve's October policy meeting shifted substantially. The market-implied probability of another rate increase, which had reportedly been above 60% a week earlier, dropped to below 20%.

US equities moved higher on Friday following the jobs data, although the Dow Jones and S&P 500 had spent much of the previous five weeks under pressure. The Nasdaq performed comparatively better.

Gold Outlook: Dollar and Treasury Yields Could Decide Next Move

Precious metals experienced sharp fluctuations during the week. Spot gold and silver ended the week down by more than 3% and 6%, respectively, according to the report.

Gold managed to move above $4,200 an ounce on two occasions following softer inflation and employment figures, but failed to sustain those gains and eventually closed below $4,150.

Silver followed a similar pattern. It approached the $62-per-ounce mark twice during the week but subsequently slipped below $60.

The direction of the dollar and US bond yields could remain crucial for both metals. A renewed rise in either could put additional pressure on gold and silver, while softer yields and a weaker dollar could provide some support.

Gold Support and Resistance Levels to Watch

From a technical perspective, the short-term setup for gold futures remains weak.

Gold is trading below its 20-day exponential moving average (EMA) as well as the Supertrend (7,3) indicator. The 14-period Relative Strength Index (RSI) is also below 50, indicating relatively weak momentum.

According to the technical levels cited in the report, ₹1,45,950 per 10 grams is an immediate support area for gold futures.

A sustained move below this level could potentially open the way towards the next support zone around ₹1,44,500 per 10 grams.

On the upside, initial resistance is seen around ₹1,51,100, followed by a stronger hurdle near ₹1,53,000 per 10 grams.

Gold may need to hold consistently above ₹1,53,000 for the short-term technical picture to improve meaningfully. Until then, the reported technical setup remains broadly sideways to bearish.

These are technical reference levels, however, and should not be interpreted as guaranteed price targets.

Crude Oil Market Faces Supply and Geopolitical Uncertainty

Crude oil could also remain in focus as markets assess supply developments and geopolitical risks.

According to the report, G7 countries have developed a combined plan to release or draw down as much as 100 million barrels of diesel and crude oil inventories over the coming four months amid concerns over fuel prices. A significant portion of the diesel inventory adjustment is expected during the first three weeks.

This development contributed to pressure on crude prices towards the end of the week.

However, geopolitical uncertainty in the Gulf continues to provide a potential risk premium.

Reports cited in the original analysis also point to the possible deployment of a third US carrier strike group to the region, with its arrival expected by late November.

Meanwhile, diplomatic efforts involving Iran continue, although no major breakthrough has been reported.

Saudi Pipeline Returns to Operation

On the supply side, Saudi Arabia's East-West pipeline has reportedly resumed operations following damage caused by a drone attack last month.

The pipeline is currently said to be operating at roughly half of its full capacity, transporting around 3.5 million barrels per day.

At the same time, total crude shipments from the Middle East reportedly increased to approximately 16.3 million barrels per day in September, the fastest pace since the regional conflict began in late February.

These additional supplies could provide some relief to the market, although geopolitical developments remain an important source of uncertainty.

Copper and Other Base Metals Under Pressure

Base metals also suffered substantial losses during the week.

Copper fell more than 2% to close near $14,260 per tonne, while zinc and aluminium declined by approximately 5%.

A stronger dollar was a major headwind because internationally traded commodities priced in US dollars generally become more expensive for buyers using other currencies when the greenback appreciates.

The dollar's move to a 17-month high also overshadowed some improvement in economic indicators from China.

China Manufacturing Activity Shows Improvement

China's manufacturing PMI reportedly increased for the first time since June. The country's non-manufacturing index, covering services and construction, also improved to 50.2.

The improvement followed a fresh stimulus package described in the report as China's largest since 2024, aimed at supporting the country's economic growth target of around 4.5% to 5%.

Copper had initially remained above $14,400 per tonne because of supply concerns, but later weakened along with other commodities.

Lower trading activity in China during the National Day holidays has added uncertainty to the near-term outlook for industrial metals.

Copper Supply Risk Could Become a Major Market Trigger

Copper traders will also closely follow labour negotiations in Chile.

Workers at BHP's Escondida mine and Antofagasta's Centinela operation have reportedly rejected new contract offers and entered a government-mandated mediation process.

If negotiations fail, a legal strike at Centinela could reportedly begin around October 13.

Any prolonged disruption at major Chilean mines could tighten physical copper supplies and potentially affect international prices.

Meanwhile, proposals to restart Panama's Cobre Panamá mine may offer some longer-term supply relief, although the report suggests this may not be enough to immediately offset other risks.

FOMC Minutes and Fed Speeches in Focus

The coming week's economic calendar is relatively light, making central-bank communication particularly important.

Investors are expected to track services PMI readings from major economies along with preliminary US consumer sentiment and inflation-expectation data.

More importantly, the release of the FOMC meeting minutes and speeches from Federal Reserve officials could offer clues about how policymakers interpret the latest weak employment and inflation data.

These signals could influence the dollar and Treasury yields, which in turn may affect gold, silver and other commodities.

OPEC and Middle East Developments Could Guide Crude Prices

The report does not expect a major change in OPEC production quotas in the immediate period. Markets are instead likely to monitor the G7's planned diesel release and any indication that additional reserves could be deployed if fuel prices remain elevated.

Geopolitical tensions involving Saudi Arabia and the Houthis remain another significant risk for crude oil because any escalation affecting Saudi energy infrastructure could disrupt supply.

Overall, the coming week could remain highly sensitive to changes in the dollar, US Treasury yields, Federal Reserve expectations, Middle East developments and physical supply risks.

For gold, ₹1,45,950 and ₹1,44,500 are the important reported support zones, while ₹1,51,100 and ₹1,53,000 are the resistance levels traders may watch. Copper could react to developments in Chilean mine negotiations, while crude oil remains exposed to both inventory releases and geopolitical developments.

Disclaimer: Commodity prices can be highly volatile. Support and resistance levels are technical estimates rather than guaranteed targets. This article is for informational purposes only and should not be considered investment or trading advice. Investors should consider consulting a qualified financial professional before making investment decisions.