Powell's bullish turn puts pressure on commodities, although analysts see opportunities

Jerome Powell’s most restrictive stance toward the Federal Reserve triggered a wave of selling in global commodity markets during the early sessions of this week. From gold and silver to crude oil and industrial metals, nearly all categories of basic assets experienced a significant decline as investors recalculated their strategies in the face of a more aggressive monetary policy.

Widespread Sell-Off in Precious Metals and Crude Oil

The decline was particularly severe in precious metals, which plummeted along with U.S. stocks in a risk-averse move. According to Jin10 analysis, Vivek Dhar, a commodities specialist at the Commonwealth Bank of Australia (CBA), explained that the market is reinterpreting Powell’s signals as evidence of a more hawkish stance on monetary policy. “Investors now perceive Powell as less willing to soften his restrictive approach,” Dhar noted, reflecting a shift in market expectations regarding the interest rate horizon.

This reassessment of the Federal Reserve’s outlook did not occur in isolation. Asian stock markets followed the downward trend of U.S. futures, amplifying risk aversion amid a backdrop of corporate earnings reports, central bank meetings, and significant macroeconomic releases.

Dollar Strengthening Amplifies Pressure on Basic Assets

A key factor in the intensity of the sell-off was the simultaneous strengthening of the U.S. dollar, which further pressured prices of commodities quoted in foreign currency. The expected monetary tightening caused the dollar to gain ground, creating a challenging environment not only for precious metals but also for crude oil and other natural resources.

Tactical Correction or Structural Break? Dhar Maintains Optimism

Despite the movement’s intensity, Dhar warned against hasty interpretations of the event. “The crucial question is whether we are witnessing the start of a sustained decline in commodity prices or simply a temporary adjustment within a broader trend,” the analyst stated. His conclusion was clear: he views the move as a buying opportunity, not a fundamental change in market fundamentals.

Notably, the CBA strategist reaffirmed his long-term constructive outlook for gold, maintaining his projection that the price will reach $6,000 per ounce in the fourth quarter. This forecast sharply contrasts with the current volatility, suggesting that analysts see the current pressure on commodities as a phase within a longer bullish cycle.