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Comex gold steadies near $2770, as market participants remain cautious ahead of the U.S. Federal Reserve's interest rate decision due later in the day, while also pondering the implications of President Donald Trump's trade policies. With the Fed's first policy meeting of the year wrapping up later in the day, investors are laserfocused on any signals on the possible path of interest rates, along with Chair Jerome Powell's speech that may offer clues on the outlook for the next gathering in March. The central bank is widely expected to keep rates steady after 100 basis points of easing last year. Elsewhere, Trump still plans to make good on his promise to issue tariffs on Canada and Mexico. His policies are widely seen as inflationary, which could pressure the Fed to keep rates higher to curb price pressures.

WTI crude prices fell nearly 1% as traders weighed the impact of potential U.S. trade tariffs on global growth and upcoming inventory data after the API report signaled a 2.86 million barrel rise in crude stockpiles. Prices were further weighed, as concerns eased as Libya’s National Oil Corp confirmed normal export operations following discussions with protesters. Meanwhile, market attention shifted to the White House’s reaffirmation of a 25% tariff on Canadian and Mexican imports set to take effect on Saturday. Adding to the uncertainty, the upcoming OPEC+ JMMC meeting next Monday, along with ongoing discussions among key oil producers, is expected to influence market sentiment.

European natural gas prices extended gains for a second day as unplanned supply disruptions in Norway, the region’s top fuel provider, persisted. Benchmark futures climbed as much as 2.3%, driven by production issues at two Norwegian fields, colder weather forecasts, and a rise in carbon prices. Meanwhile, Europe’s gas inventories have been depleting faster than usual, now at 55% capacity compared to 72% a year ago, keeping prices volatile amid ongoing supply risks. Traders are also monitoring EU discussions on Russian LNG imports, with the latest sanctions package unlikely to include the fuel, though a long-term phase-out remains under consideration. With Europe increasingly reliant on LNG, especially after the halt of Russian pipeline flows via Ukraine, supply dynamics remain a key focus for the market.

LME base metals traded mixed, with zinc rebounding from a sharp decline as supply constraints lent support, driven by a third consecutive year of declining global mined zinc production, reduced refined output from China, and an anticipated slowdown at Alaska’s Red Dog Mine in 2025. In contrast, copper hovered near threeweek lows amid mounting U.S. tariff concerns. Market sentiment remained cautious after President Trump announced new tariffs on key commodities, including aluminum and copper, ahead of the February 1 deadline for the first round of U.S. tariffs on China. Additionally, weaker-than-expected Chinese manufacturing data weighed on prices, intensifying demand concerns. With Chinese markets closed for the Lunar New Year holiday, trading volumes are expected to remain subdued.

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