Gold prices continued their decline in the European market on Wednesday, marking the third consecutive day of losses and approaching a four-week low. The precious metal remains under pressure from a strengthening U.S. dollar against a basket of global currencies.

The continued demand for the American currency as a preferred alternative investment comes as optimism fades regarding the success of peace talks between the United States and Iran. Markets are also focusing on the Federal Reserve’s decisions later today—the final meeting under Jerome Powell’s leadership—where interest rates are expected to remain unchanged while providing critical clues on the future path of U.S. monetary policy.

Price Overview

* Gold Prices Today: Gold fell by 0.85% to ($4,557.39), from an opening level of ($4,596.76), after recording a session high of ($4,610.48).

* At Tuesday's close, gold prices lost 1.8%, marking a second consecutive daily loss and hitting a four-week low of 4,554.97 dollars per ounce due to the rising dollar.

The U.S. Dollar

The dollar index rose 0.15% on Wednesday, extending gains for a second session. This climb reflects investors' focus on the dollar as a safe haven amid fears of a deadlock in U.S.-Iran peace talks and the potential for renewed military confrontations in the Middle East.

Efforts to end the war have reached an impasse, with Donald Trump expressing dissatisfaction with Tehran's latest proposal. The U.S. President insists on including the nuclear file as a core component of any peace agreement. Meanwhile, oil prices continue to rise, with Brent crude remaining above 110 dollars per barrel amid reports that the U.S. will extend its blockade of Iranian ports.

The Federal Reserve

The Federal Reserve concludes its third policy meeting of 2026 later today. The central bank is widely expected to maintain interest rates at the 3.75% range for the third consecutive meeting. 

The interest rate decision and policy statement are scheduled for release at 18:00 GMT, followed by a press conference with Fed Chair Jerome Powell at 18:30 GMT. His comments are expected to provide decisive evidence regarding the future trajectory of rates, particularly in light of economic developments linked to the Iranian war.

Jerome Powell

* Today’s meeting is the last for Jerome Powell as Chair of the U.S. central bank.

* Powell's official term ends on May 15, 2026.

* President Donald Trump has nominated Kevin Warsh to succeed Powell. The Senate is expected to vote on his confirmation soon so he can assume duties next month.

U.S. Interest Rates

* Kevin Warsh stated last week that he has not made any promises to Trump regarding interest rate cuts.

* According to the CME FedWatch Tool: The probability of keeping rates unchanged this week stands at 99%, with a 1% probability of a 25-basis-point hike.

Gold Performance Expectations

Market strategist Ilya Spivak noted that gold has stabilized as markets await the FOMC meeting. He explained that much of the market's resilience since the tariff-induced panic in April stems from the assumption that the Fed is ready to intervene if conditions deteriorate. If the Fed signals difficulty in taking such action, gold prices could fall. Standard Chartered Bank noted in a memo that while gold performance may be volatile in the near term, structural drivers—such as geopolitical tensions and trade uncertainty—should push prices to retest record highs in the coming months.

SPDR Fund

Gold holdings at the SPDR Gold Trust decreased by 3.43 metric tons on Tuesday, marking the fifth consecutive daily decline. Total holdings fell to 1,040.91 metric tons, the lowest level since November 24, 2025.

The Euro fell in the European market on Wednesday against a basket of global currencies, continuing its losses for the second consecutive day against the U.S. dollar. This decline is driven by risk aversion as investors focus on purchasing the American currency as the preferred alternative investment, following media reports that the United States will extend its blockade of Iranian ports.

The European Central Bank (ECB) begins its monetary policy meeting later today, with decisions due on Thursday. Markets widely expect interest rates to remain unchanged, while looking for further clues regarding the path of European monetary policy for the remainder of the year.

Price Overview

* Euro Exchange Rate Today: The Euro fell against the dollar by approximately 0.1% to ($1.1705), from today’s opening price of ($1.1712), after reaching a high of ($1.1621).

* The Euro ended Tuesday's trading down by less than 0.1% against the dollar, marking its first loss in three days amid concerns that peace talks between the U.S. and Iran have stalled.

The U.S. Dollar

The dollar index rose by 0.1% on Wednesday, continuing its gains for the second consecutive session. This reflects the ongoing ascent of the American currency against a basket of major and minor rivals.

This rise comes as investors prioritize the U.S. dollar as a safe haven amid fears that current diplomatic efforts may falter, increasing the likelihood of renewed military confrontations in the Middle East. Efforts to end the war with Iran have reached an impasse, with Donald Trump expressing dissatisfaction with Tehran's latest proposal, as the U.S. President insists on addressing the nuclear file as a fundamental part of any peace agreement.

Meanwhile, Brent crude remained above 110 dollars per barrel amid reports that the U.S. will extend its blockade of Iranian ports. The results of the Federal Reserve meeting, scheduled for release later today, dominate the scene. The central bank is widely expected to hold rates steady, with focus shifting to its assessment of the war's impact on the economy and the future of Jerome Powell.

European Central Bank

The ECB convenes later today for its third monetary policy meeting of 2026, with decisions to be announced on Thursday. The central bank is expected to keep interest rates on hold for the seventh consecutive meeting.

The policy statement and Christine Lagarde’s press conference are expected to provide stronger evidence regarding the trajectory of European interest rates this year, especially amid speculation that inflation may accelerate again due to rising global energy prices. Sources told Reuters that the ECB is likely to begin discussing potential rate hikes during this week's meeting.

European Interest Rates

* Money market pricing for a 25-basis-point interest rate hike by the ECB this week remains stable at less than 20%.

* ECB President Christine Lagarde stated that the bank is prepared to raise interest rates even if the anticipated rise in inflation is expected to be short-term.

The Australian dollar fell in the Asian market on Wednesday against a basket of global currencies, moving in negative territory for the second consecutive day against its U.S. counterpart. This follows the release of Australian inflation data that came in below market expectations.

The data led to a decrease in the probability of the Reserve Bank of Australia (RBA) raising interest rates at its upcoming May meeting, despite warnings from the Treasurer that the oil shock could impact a broader range of prices across the country.

Price Overview

* **Australian Dollar Exchange Rate Today:** The Australian dollar fell 0.25% against the U.S. dollar to (0.7160), from an opening price of (0.7179), after recording a high of (0.7190).

* The Australian dollar ended Tuesday's trading down approximately 0.1% against the U.S. dollar, marking its first loss in three days amid a decline in U.S. stocks on Wall Street.

Inflation in Australia

Data released Wednesday by the Australian Bureau of Statistics showed that the headline Consumer Price Index (CPI) rose 4.6% annually in March, lower than market expectations of 4.8%. The index had recorded a 3.7% increase in February.

While automotive fuel prices jumped by nearly 33% in March compared to February, the government's measure to halve the fuel tax starting in April is expected to ease some pressures.

Treasurer Jim Chalmers stated in a press conference: "What we are seeing here is essentially a reflection of international pressures on oil prices. However, in the coming months, we expect the impact of this oil shock to extend across a wider range of prices, affecting trimmed mean averages as well."

Australian Interest Rates

* Following the aforementioned data, the market pricing for a 25-basis-point interest rate hike by the RBA in May fell from 85% to 75%.

* To refine these probabilities, investors are awaiting further data on unemployment and wage levels in Australia.

* The RBA has raised interest rates twice this year to 4.1%, resulting from the impact of the U.S.-Israeli war on Iran on global oil trade and rising fuel prices nationwide.

Opinions and Analysis

Stephen Smith, partner at Deloitte Access Economics, said: "Today's CPI data, the first to partially reflect the closure of the Strait of Hormuz, points to the possibility of the RBA raising interest rates next week." Smith added: "This hike is not certain, but Australia's inflation level prior to this crisis leaves the central bank with few options."

Tony Sycamore, an analyst at IG, noted that there is a counter-argument for the RBA to keep interest rates steady in May to gather more information, especially as gasoline prices have begun to decline in recent weeks.

The Canadian dollar fell against its U.S. counterpart on Tuesday, one day after a major energy sector acquisition that could have supported the Canadian currency, and ahead of a fiscal update from Prime Minister Mark Carney's government.

The Canadian dollar dropped 0.4% to 1.3680 CAD per U.S. dollar, or 73.10 U.S. cents, after moving within a range between 1.3614 and 1.3691. On Monday, it had recorded its highest level in nearly seven weeks at 1.3595.

Shaun Osborne and Eric Theoret, strategists at Scotiabank, noted that news of mergers and acquisitions may have supported the Canadian dollar yesterday, but had less impact today as it declined alongside its major currency peers.

On Monday, the British company Shell announced it had agreed to purchase the Canadian energy firm ARC Resources in a deal valued at 16.4 billion dollars. Analysts viewed this as a significant confirmation of the Canadian energy sector's attractiveness as an investment destination, particularly given what they described as the Canadian government's trend toward supporting growth in the sector.

The Canadian fiscal update, expected after 4 p.m. ET (2000 GMT), is anticipated to show an improvement in the budget deficit and higher revenues for the past fiscal year. However, economists expect that gains from rising oil prices may have been partially offset by weak consumer spending and new government spending measures.

The Canadian real estate market continues its longest decline in decades, putting pressure on household spending, although the local stock market sitting at record levels has helped create additional wealth estimated at hundreds of billions of dollars.

In currency markets, the U.S. dollar rose against a basket of major currencies as investors focused on central bank decisions. Both the U.S. Federal Reserve and the Bank of Canada are expected to keep interest rates unchanged on Wednesday.

Additionally, the price of oil, one of Canada's most important exports, rose 3.4% to 99.61 dollars per barrel as efforts to end the war in Iran continue to stall, keeping the Strait of Hormuz largely closed. Conversely, the United Arab Emirates announced it would leave OPEC and the OPEC+ alliance, which eased some supply-related concerns.

In bond markets, Canadian yields rose across the curve, tracking their U.S. counterparts. The 10-year yield rose by 2.7 basis points to reach 3.530%, after earlier touching its highest level since April 7 at 3.546%.