Gold prices fell on Wednesday, for the first time in 4 days, and pulled back from a 1-week high due to profit-taking, ahead of the US inflation data, which provide cues about the timing of the first US interest rate hike this year.

Gold prices fell 0.4% to $1,814.68 an ounce, after opening at $1,821.18, and hit a day high at $1,822.54.

Gold gained 1.1% yesterday, the third daily gain in a row, and the largest daily gain since December 16, and hit a 1-week high at $1,823.24

This biggest gain in 2022 came thanks to a drop in the US 10-year Treasury bond yields, following Federal Reserve Chairman Jerome Powell's statements before Congress.

Jerome Powell said the decision to cut down the Federal Reserve's $9 trillion general budget could take a few months.

At 13:30 GMT, the US consumer price index reading will be released, which is expected to rise by 7.0% y/y in December from 6.8% in November, and the monthly reading is expected to rise by 0.4% from 0.8%.

Gold stocks at the SPDR ETF fell 0.87 metric tonnes yesterday, with the total at the lowest since December 28 at 976.21 metric tonnes.

Oil prices rose on Wednesday, for the second day in a row, and hit 2-month highs after the release of preliminary data on US crude inventories that showed a large drop, and ahead of the EIA's weekly report.

US crude rose 0.75% to the highest since November 11 at $81.97 a barrel, after opening at $81.36, and hit a low at $81.19, and Brent crude rose nearly 0.9% to the highest since November 10 at $84.32 a barrel, after opening at $83.59, and hit a low at $83.54.

The US crude gained 3.6% yesterday, and Brent crude rose 3.25%, in the first daily gain in 3 days, and the largest daily gain since last December 27.

These gains came thanks to the US dollar's drop against a basket of major currencies, and data showing that OPEC Plus output was less than specified during December, due to a slowdown in production in Nigeria and Libya.

The American Petroleum Institute reported in preliminary data that the US crude inventories fell 1.1 million barrels during the week ending January 7, while analysts forecast a drop by 1.6 million barrels.

The total US commercial inventories fell to 419 million barrels, which is the lowest level since the week ending September 17, in a positive sign of the US domestic demand.

The US Energy Information Administration's official report will be released later today, amid forecasts for inventories to drop by 2.1 million barrels.

Sterling rose in European trade against dollar for second straight session, marking two-month highs as the dollar weakens, following remarks by Fed Chair Jerome Powell, while the pound is buoyed by expectations of a rate hike in the UK in February.

GBP/USD rose 0.1% to 1.3645, the highest since November 4, with an intraday low at 1.3625, after closing up 0.4% yesterday, the second profit in three days following Powell's Congressional testimony. 

The dollar index fell 0.1% on Wednesday for another session, marking six-week lows at 95.53 against a basket of major rivals. 

Jerome Powell said the decision to cut down the Federal Reserve's $9 trillion general budget could take a few months.

In the UK, bets are pointing to yet another rate hike in February's policy meeting. 

The bets increased as concerns over the economic impact of Omicron on the British economy faded, with the government refusing to impose new restrictions.  

The multitude of studies showed Omicron in large causes less severe symptoms than previous Covid variants. 

Oil prices rose rose on Friday, as the US dollar fell against most currencies, ahead of the release of US inventories data.

Federal Reserve Chairman Jerome Powell in his testimony before the US Congress endorsed Fed management and response to the pandemic, thanking President Joe Biden for nominating him for a second term.

Powell added that the Fed is committed to its targets, noting that inflation will drop and some relief would come as the economy returns to its normal state. 

Powell stressed that the Fed will speed up the rate hike to contain inflationary pressures.

The American Petroleum Institute will release its preliminary report on the US crude inventories later today, and the US Energy Information Administration will release the official data on Wednesday.

The dollar index fell against a basket of major currencies by 0.4% at 95.5 points as of 19:14 GMT, after hitting a high of 96.07 points and a low of 95.5 points.

WTI February futures rose 3.7% to $81.1 a barrel, as of 19:14 GMT.

Brent March futures rose 3.4% to $83.6 a barrel.