Gold prices fell in European trade on Wednesday, extending losses for the second day and moving away from two-week highs on active profit-taking while the dollar powers up against a basket of major rivals.

Dollar's gains come ahead of the Federal Reserve's policy decisions, expected to maintain interest rates unchanged but will provide important clues on the likely policy decisions ahead.

Gold Prices Today

Gold prices fell 0.2% to $1,928 an ounce, with a session-high at $1,932, after losing 0.2% yesterday, the first loss in four days, away from a two-week high at $1,937. 

US Dollar

The dollar index rose 0.1% on Wednesday for the second session against a basket of major rivals, pressuring dollar-denominated gold futures.

The Fed

The Federal Reserve will wrap up its two-day policy meeting today, fully expected to maintain interest rates unchanged at 5.5%. 

The meeting will provide important clues on the future steps of the Fed, and whether it'll raise interest rates again in November. 

US Rates

Pricing for a 0.25% interest rate hike by the Federal Reserve this week stands at just 1%.

Pricing for a 0.25% Fed interest rate hike in November stands at a stronger 30%. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 878.83 tonnes, the lowest since January 2020.

Sterling tumbled in European trade against a basket of major rivals, plumbing a four-month low against US dollar and almost trading above 1.23 as UK inflation slows down.

The steep drop in UK consumer prices bolsters expectations this week's Bank of England interest rate hike will likely be the last in the current cycle of policy tightening.

GBP/USD

GBP/USD fell 0.5% to 1.233, the lowest since May 30, with a session-high at 1.2395.

The pair rose 0.1% yesterday, the first profit in six days. 

UK Inflation 

Earlier UK data showed consumer prices rose 6.7% in August, the slowest pace since February 2022, and below market forecasts of 7.0%.

Core prices, excluding energy and food, rose 6.2%, down from 6.8% in July, and below forecasts of 6.8%. 

Such a decline shows that inflationary pressures are reduced on Bank of England's policymakers. 

BOE

Bank of England is convening tomorrow to discuss policies and economic developments in the UK, while expected to raise interest rates by 25 basis points to 5.5%. 

Such a hike could be the last in the current cycle of policy tightening, especially as the UK economy slows much faster than expected. 

Bank of England Governor Andrew Bailey recently stated the BOE is very close to the end of the policy tightening cycle as prices continue to stabilize. 

Earlier UK data showed consumer prices rose 6.7% in August, the slowest pace since February 2022, and below market forecasts of 7.0%.

Core prices, excluding energy and food, rose 6.2%, down from 6.8% in July, and below forecasts of 6.8%. 

Recently, the giant Danish transport company Moller Maersk issued its first green bond, with the debt, amounting to $750 million, to be used in financing green assets.

With these bonds, the company joints a fleet of companies, which issued similar bonds to finance green energy transition. 

However, green bonds, just like carbon credits, became a tool ripe with exploitation and criticism. 

According to a Bloomberg report, a source close to Moller Maersk said the company is using its green loans to acquire green assets and companies, and to finance operational costs, which isn't very green really. 

The history of green bonds goes back to 2007 when the European investment bank issued the first such a bond, and ten years later, even oil companies started issuing green bonds to lower the carbon condensation in refineries among other goals. 

‏The European Union's definition of a green bond is way too loose, and allows for a great deal of exploitation as many analysts notice.

There are a variety of tools and methods that could be theoretically supportive of green causes, but which entail many other non-green activities, and outright primary capitalist benefits. 

Thus several regulators, including in the UK, have started to call for tighter conditions for green loans and bonds, and called on issuers to specify more serious causes. 

The whole business could easily be corrupted, with the Financial Times reporting that  green loans to the Gabon country was used for purchasing presidential loans for example. 

The main aim of the green bonds is noble as it tackles the prickly issues of climate change and the corporate responsibility for it, but there's still much to do to make it a reliable method of carbon management. 

Green loans face the risk of getting sidelines eventually as a useless method for fighting climate change, however, it also holds great potential, if regulations guided them in the right way.