Powell's Hawkish Expectations Trigger Commodity Sell-Off Wave Starting from Gold to Oil

The global commodity markets faced significant selling pressure at the start of the week, with precious metals such as gold and silver experiencing sharp declines. Market participants are reassessing expectations for the U.S. Federal Reserve as perceptions grow that Jerome Powell will maintain a tighter policy cycle. The commodity sell-off coincided with a drop in U.S. equity indices, creating a strong bearish momentum and shifting market sentiment toward risk-off territory.

Gold and Silver Surprised as Investors Adjust Positions

Commonwealth Bank of Australia (CBA) commodity strategist Vivek Dhar revealed that price movements of precious metals are heavily influenced by investor repositioning. They sold gold alongside equities, indicating expectations that Powell will remain hawkish for a longer period. This event triggered turbulence in the precious metals market, affecting everything from silver to industrial metals. The week is filled with key factors, including corporate earnings reports, central bank meetings, and the release of significant macroeconomic data.

U.S. Dollar Strengthening Adds Pressure Across Commodity Markets

The strengthening of the U.S. dollar has become an additional trigger for pressure in the markets. As the dollar gains, commodities priced in dollars become more expensive for international buyers, creating broader headwinds. Crude oil, base metals, and the entire spectrum of commodities are feeling the impact of this exchange rate dynamic. Although the sell-off wave is fierce, Dhar cautions against jumping to conclusions.

Dhar: This Is a Strategic Correction, Not a Fundamental Change

CBA strategists emphasize that the current sell-off is more of a market adjustment than a sign of fundamental shifts in commodity dynamics. “The key question is whether this marks the start of a structural decline or just a temporary correction,” he said, adding that the CBA team views this negative momentum as a buying opportunity, especially for investors still bullish on the long-term outlook.

Despite extreme volatility in precious metals, Dhar remains confident in a bullish long-term outlook for gold. He maintains a target price of $6,000 for gold in the fourth quarter, even after recent market shocks. This view reflects a belief that Powell’s hawkish expectations are temporary, and long-term fundamentals continue to support higher gold prices.