Oil attempts to recover from year lows on Chinese demand hopes
Oil prices rose in European trade away from year lows on hopes of improving demand in China, while the dollar gives up ground ahead of the Fed's meeting.
Prices are also buoyed by Russia's attempts to cut output to counter the EU's price ceiling on Russian crude.
Global Prices
US crude rose 1.2% to $72.30 a barrel, while Brent added 0.7% to $76.78 a barrel, with a session-low at $75.29.
US crude lost 0.4% on Friday, the sixth loss in a row, plumbing year lows at $70.10 a barrel, while Brent rose 0.25% to $75.16 a barrel, the lowest since December 2021.
Global oil prices tumbled 10.8% last week, the heftiest weekly loss since March on concerns about the global economy and fuel demand.
Chinese Demand
China continues to ease its strict Covid 19 policies, however Beijing streets remained quiet with many companies still closed.
The government is attempting to reboot the economy once more, after a period of heavy restrictions that impacted growth and fuel demand.
The Dollar
The dollar index fell 0.2% on Monday against a basket of major rivals, underpinning dollar-denominated commodities.
The decline in dollar comes ahead of the Federal Reserve's policy meeting this week, widely expected to increase interest rates by only 50 basis points.
Russian Output
Russian President Vladimir Putin said Russia could cut production and refused to sell crude to any country to imposes a "dumb" price ceiling on Russian exports.
Deutsche Bank said in an analysis that the recent EU measures against Russian crude will add to energy risks in the next few months, with supplies risks only subsiding by spring 2023.
Dollar resumes losses as US yields slow down
Dollar fell in European trade on Monday against a basket of major rivals, resuming losses as US treasury yields slow down, especially 10-year yields.
Such developments come ahead of important US inflation data tomorrow, while the Federal Reserve holds its last meeting of the year this week, expected to increase rates by only 50 basis points.
The Index
The dollar index fell 0.25% to 104.67, with a session-high at 105.23, after closing Friday 0.15% higher, the first profit in three days following upbeat US producer prices data.
US Yields
US 10-year treasury yields fell 1.8% on track for the first loss in three sessions.
Tomorrow, important US consumer prices data will be released, expected to show another slowdown with inflationary pressures reducing on the Fed.
The Federal Reserve is holding its last meeting of the year this week, expected to increase rates by only 50 basis points.
Gold opens lower ahead of global central bank meetings
Gold prices fell in European trade for the first session in five days away from five-month highs under pressure from the dollar.
Global central banks are convening in the US, Europe, the UK, and Switzerland this week, and are expected to carry on policy tightening, in turn hurting non-yielding gold futures.
Gold Prices
Gold prices fell 0.6% to $1,785 an ounce, with a session-high at $1,797 an ounce, after rising 0.45% on Friday, the fourth profit in a row, ending near five-month highs at $1,810.
The Dollar
The dollar index rose 0.2% on Monday for another session against a basket of major rivals, in turn pressuring gold prices and other dollar-denominated metals.
US producer prices rose in November more than expected according to latest data, underscoring the ongoing inflationary pressures.
Global Central Banks
The Federal Reserve is convening tomorrow to discuss monetary policies, expected to raise interest rates by only 50 basis points.
Other European central banks are convening as well, expected to hike rates by 50 basis points amid efforts to control runaway inflation.
Estimates
Analysts believe gold might find difficulty gaining any trend, whether downward or upward, until the Fed convenes this week.
If the Fed indeed matched expectations, it would weaken the dollar a bit and underpin gold prices for some time.
The SPDR
Gold holdings at the SPDR Gold Trust rose 2.32 tones on Friday to a total of 910.41 tones, the highest since November 14.
Euro opens the week lower on European rate forecasts
Euro fell in European trade against dollar for the second session on speculation about European rates, while markets expect the ECB to hike interest rates by 50 basis points on Thursday.
Dollar extended its gains after earlier data showed continued inflationary pressures on Fed policymakers, bolstering the case for even more aggressive policy tightening.
EUR/USD fell 0.2% to 1.0506, with a session-high at 1.0537, after closing down 0.2% on Friday, the first loss in three days on US producer prices data.
European Rates
The ECB is convening later this week to discuss latest developments in the euro zone economy, with most analysts expecting just a 0.5% rate hike.
Analysts believe the current economic environment in Europe would push the ECB to a 0.5% hike this week.
Europe's consumer prices slowed down more than expected in November, underlining the case for a 0.5% rate hike.
The Dollar
The dollar index rose 0.2% on Monday, extending gains for the second session against a basket of major rivals.
US producer prices rose in November more than expected according to latest data, underscoring the ongoing inflationary pressures.