Dollar Slides; Gold Soars, China Halts Coal Mines!

Dollar weakens, gold jumps and the commodity ripple

In the past week the U.S. dollar moved sharply lower as traders priced in a higher probability of a 25 basis-point Federal Reserve easing. The dollar decline coincided with gold breaking through prior highs, trading above $3,700 per ounce. That combination reflects two linked drivers: lower expected policy rates reduce real yields, increasing the appeal of non-interest-bearing assets such as bullion, while a softer dollar raises purchasing power for buyers outside the United States.

The move is not confined to precious metals. When the dollar weakens it mechanically reduces the local-currency cost of dollar-priced commodities for many importers, supporting demand and often lifting prices across energy, industrial metals and soft commodities. At the same time, lower policy-rate expectations can ease funding costs and inventory carrying expenses, which may support physical commodity activity in the near term.

How this affects different commodity groups

• Precious metals: Gold and silver show the most immediate sensitivity. Lower real yields and currency effects are a direct tailwind.
• Industrial metals: Copper and nickel typically benefit from easier financial conditions and currency moves, though demand fundamentals still matter.
• Energy: Oil can gain via modest demand support from cheaper non-USD fuel for importers; supply-side drivers remain key.
• Agriculture: Ags are influenced via FX pass-through and the spending power of key importers, but crop and weather factors are often dominant.

China orders halts at Ordos coal mines, lifting coking coal

Separately this week regional authorities in Inner Mongolia ordered about 15 mines in the Ordos area to stop production after those operations exceeded local output quotas. The combined nameplate capacity cited for the affected assets is in the tens of millions of tonnes per year. The announcement triggered a sharp near-term rally in Chinese coking coal futures, with the Dalian benchmark up roughly mid-single digits on the first session after the news.

Why metallurgical coal tightened first

The Ordos stoppages hit metallurgical coal flows used for steelmaking more directly than seaborne thermal coal. That creates immediate upside pressure on domestic met-coal benchmarks and raises input costs for steel producers in China, potentially squeezing margins if steel prices do not rise in step. For seaborne met-coal markets, the main effect is a near-term risk premium as buyers anticipate tighter domestic availability and possible increased purchases from abroad.

Practical takeaways and watch points

• Near term, expect commodities priced in dollars to receive a boost while the dollar remains soft and rate-cut odds stay elevated.
• Watch gold for follow-through above current highs: if real yields continue to fall, bullion upside can extend quickly.
• For Asia-focused commodity traders, monitor Chinese coal flows and steel mill inventory data. If Inner Mongolia curbs persist or widen, regional coking coal spreads could widen further.
• Keep an eye on upcoming Fed communications. Any change to rate-cut odds will recalibrate the dollar and then the cross-commodity reaction.

Bottom line: a weaker dollar and softer U.S. rate expectations are a broad tailwind for dollar-priced commodities, while targeted supply actions in China have created localized pressure in the metallurgical coal and steel complex. The interplay of macro-driven demand support and China-specific supply moves will determine which segments see the most sustained price moves in the coming days.

Sources: regional regulatory announcements and market pricing moves this week.