The Federal Reserve's tightening triggers a sell-off in commodities: gold and silver decline

Investors recalibrated their portfolios at the start of the week in response to rising expectations of a more restrictive stance from the Federal Reserve, triggering a massive liquidation in commodities. Market analysis indicates that the bearish trend has simultaneously involved precious metals, oil, and industrial commodities, fueled by the perception that Jerome Powell will maintain a more hawkish policy course for an extended period.

Global markets under pressure from Powell expectations

Data from Jin10 reveal that market participants have interpreted recent signals from the U.S. central bank as a sign of continued hawkishness. Vivek Dhar, chief commodities strategist at the Commonwealth Bank of Australia, emphasized that this pressure reflects a shift in investor sentiment: “The market has simultaneously sold off precious metals and U.S. equities, signaling that investors now perceive Powell with an even more hawkish stance than before.”

This dynamic has affected the main commodity sectors simultaneously, with Asian equity futures following the decline in U.S. markets, further amplifying risk aversion during a particularly busy week of corporate earnings, central bank meetings, and key macroeconomic data releases.

The role of a strong dollar and risk aversion

Alongside perceptions of U.S. monetary policy, the strengthening of the U.S. dollar has exerted additional pressure on all commodities. A stronger dollar makes commodities more expensive for international buyers, depressing demand and reducing the attractiveness of these assets for global investors.

The intensity of the sell-off has raised fears of a potential structural change in market cycles. However, Dhar warned against overly pessimistic interpretations: “The crucial question is whether this represents the beginning of a genuine structural decline in prices or if it is simply a normal market correction.”

Buying opportunities or the start of a structural decline?

According to the CBA analyst, the decline actually represents a phase of adjustment rather than a change in fundamental fundamentals. “We see this move as a strategic buying opportunity, not as a sign of a structural deterioration in the outlook for commodities,” Dhar stated, urging investors to distinguish between tactical volatility and long-term trend changes.

The bullish outlook for gold remains intact

Despite the recent “epic shake” that hit precious metals, Dhar reaffirmed his long-term bullish view on gold. The expert maintains his forecast that gold prices could reach $6,000 in the fourth quarter, suggesting that current sell-offs are more of a strategic entry opportunity for investors who believe in the potential for future appreciation of precious commodities.

Today’s commodity volatility, therefore, should not be interpreted as a definitive regime change but as a natural correction within a broader bullish cycle.