Oil prices fell on Thursday, extending losses of more than 2% from the previous session, as investors looked ahead to a key OPEC+ meeting at the end of the week, where producers are expected to discuss another increase in output targets.

Brent crude slipped 43 cents, or 0.6%, to $67.17 a barrel, while US West Texas Intermediate (WTI) crude dropped 44 cents, or 0.7%, to $63.53.

Two sources familiar with the talks told Reuters that eight members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies – collectively known as OPEC+ – will consider additional production hikes starting in October, as the group seeks to regain market share.

Thomas Varga, analyst at PVM, said any potential increase in OPEC+ output would send a strong signal that reclaiming market share has become a greater priority than supporting prices.

OPEC+ had already agreed to raise output targets by about 2.2 million barrels per day between April and September, in addition to granting the UAE a production quota increase of 300,000 barrels per day.

In recent months, despite the accelerated pace of output hikes, Middle Eastern crude prices have remained the strongest among global regional markets. According to a report from Haitong Securities, this has bolstered Saudi Arabia’s and other OPEC members’ confidence in moving forward with higher production.

Prices also came under pressure from weak US economic data showing job openings in July fell to their lowest level in 10 months, signaling a slowdown in labor market conditions and strengthening expectations of a Federal Reserve rate cut this month.

Investors are also awaiting official US government data on crude inventories, due Thursday – a day later than usual because of Monday’s holiday – to gauge demand strength in the world’s largest oil consumer.

Industry data from the American Petroleum Institute (API) released Wednesday showed US crude stocks rose by 622,000 barrels in the week ending August 29, according to market sources.

The US dollar held steady on Thursday in a volatile week, as investors grappled with a fragile bond market and labor market data that reinforced expectations the Federal Reserve will cut interest rates this month.

With the Fed focused on employment indicators, Friday’s nonfarm payrolls report is set to be a key driver in shaping investor expectations for upcoming policy meetings.

Data released Wednesday showed job openings fell in July to their lowest level in 10 months, though layoff rates remained relatively subdued. Additional reports on private-sector hiring and monthly layoffs were due Thursday.

According to CME’s FedWatch tool, traders are now pricing in nearly a 100% probability of a rate cut this month, up from 89% a week earlier, and are expecting cumulative easing of 139 basis points by the end of next year.

The dollar traded slightly higher in relatively calm conditions, as investors refrained from making major moves ahead of Friday’s employment report.

The euro was steady at $1.1655, while sterling held at $1.3445, above Wednesday’s four-week low. The dollar index edged up to 98.23. Against the yen, the dollar gained 0.2% to ¥148.33.

Several Fed officials reiterated that labor market concerns continue to underpin their view that further rate cuts lie ahead, reinforcing market expectations of imminent action from the central bank. James Knightley, chief international economist at ING, said the Fed is “very likely to cut rates significantly in the coming months, with limited inflationary pressures coming from the labor market.” He added that ING expects 25 basis point cuts at the September, October, and December FOMC meetings.

The Fed will next meet on September 16–17.

Bond Market Concerns

This week, attention remained centered on the global bond market, where long-term yields climbed amid concerns over fiscal positions in major economies including Japan, the UK, and the US.

Lee Hardman, currency strategist at MUFG, noted: “Global bonds recovered some losses yesterday, providing temporary relief and helping to stabilize the FX market.”

A successful auction of 30-year Japanese government bonds on Thursday eased investor concerns, while dovish-leaning Fed remarks supported a modest rally in US Treasuries, pushing yields lower. The US 30-year Treasury yield slipped one basis point on the day to 4.888%, after touching 5% on Wednesday, its highest in about six weeks.

Uday Patnaik, head of Asian fixed income and emerging market debt at L&G Investment Management, said higher yields reflect weak fiscal dynamics across major advanced economies, where debt-to-GDP ratios exceed 100%. “The issue is that none of these countries are running primary surpluses, meaning revenues don’t cover even non-interest spending. Fixing this will require major spending cuts or revenue increases at a time when social and political pressures are rising,” he warned.

Other Currencies

The Australian dollar fell 0.28% to $0.6525, while the New Zealand dollar slipped 0.23% to $0.5865.

Gold prices declined in the European market on Thursday for the first time in eight sessions, pulling back from record highs amid profit-taking activity and a rebound in the U.S. dollar in the foreign exchange market.

The precious metal remains firmly positioned to potentially break through the $3,600 per ounce barrier for the first time in history, provided that upcoming U.S. economic data due Thursday and Friday show further signs of weakness in the labor market.

Price Overview

• Today’s gold price: Gold fell 1.35% to $3,511.62 per ounce, down from the session’s opening at $3,559.41, after hitting a high of $3,564.26.

• At Wednesday’s close, gold gained 0.75%, marking a seventh consecutive daily advance—its longest winning streak this year—and reached an all-time high of $3,578.61 per ounce.

• The record gains were supported by strong safe-haven demand amid rising concerns over global debt levels and renewed tensions surrounding Trump’s tariffs.

U.S. Dollar

The dollar index rose 0.15% on Thursday, resuming its advance toward a one-week high at 98.64, reflecting gains for the greenback against both major and minor currencies.

Investor focus remains centered on the dollar as the preferred alternative investment, amid mounting concerns over financial stability in Europe and the U.K. alongside growing debt burdens.

U.S. Interest Rates

• The U.S. Department of Labor reported on Wednesday that job openings fell to 7.18 million in July from 7.36 million in June, missing market expectations of 7.38 million.

• Following the data, CME Group’s FedWatch tool showed market pricing for a 25-basis-point rate cut at the September meeting jumped from 92% to 98%, while odds of no change fell from 8% to 2%.

• Expectations for a 25-basis-point cut in October also increased from 95% to 99%, with just 1% pricing in steady rates.

• Several Fed officials stressed that labor-market concerns continue to underpin their conviction for upcoming rate cuts. Fed Governor Christopher Waller said the central bank should move ahead with easing at its next meeting.

• To recalibrate these rate expectations, markets await further key labor data, including U.S. private payrolls and weekly jobless claims later today, and Friday’s August nonfarm payrolls report.

Outlook for Gold

• Brian Lan, Managing Director of Singapore-based Gold Silver Central, said: “We have seen some profit-taking, but gold remains in a bull market for now.”

• He added: “Rate-cut expectations and concerns about Fed independence will add further momentum to safe-haven demand. A move toward $3,800 or beyond in the near term would not be surprising.”

SPDR Holdings

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 6.3 metric tons on Wednesday, bringing the total down to 984.26 metric tons, after retreating from 990.56 metric tons—the highest since August 16, 2022.

The euro declined in the European market on Thursday against a basket of global currencies, resuming losses that had paused temporarily yesterday against the U.S. dollar, once again approaching its lowest level in a week, as the U.S. currency was bought as the best alternative investment amid rising financial stability risks in Europe and the United Kingdom.

Consumer price data released this week showed entrenched inflationary pressures on monetary policymakers at the European Central Bank, which led to a decline in the probability of a European interest rate cut in September.

Price Overview

•Euro exchange rate today: the euro fell against the dollar by 0.1% to (1.1650$), from the opening level at (1.1661$), recording a high of (1.1669$).

•The euro ended Wednesday’s session up by 0.2% against the dollar, after earlier hitting a one-week low of 1.1608$.

•Aside from the recovery from lower levels, the euro rose following weak U.S. job openings data, which strongly boosted expectations of a U.S. interest rate cut in September.

U.S. Dollar

The dollar index rose on Thursday by 0.1%, resuming its climb toward a one-week high at 98.64 points, reflecting the continued rise of the U.S. currency against a basket of major and minor currencies.

Investor focus remains on buying the U.S. dollar as the best alternative investment, amid growing concerns about financial stability in Europe and the U.K. and rising debt levels.

According to the CME FedWatch tool: pricing for a 25-basis point U.S. interest rate cut at the September meeting is currently stable at 98%, with probabilities of keeping rates unchanged at 2%.

To reprice these expectations, investors are awaiting a series of important U.S. economic data later today, including private-sector jobs in August, weekly jobless claims, and the performance of the services sector during the past month.

European Interest Rate

•Data released this week showed an unexpected increase in core inflation in the euro area during August, highlighting continued inflationary pressures on the European Central Bank.

•Following this data, pricing for a 25-basis point European rate cut in September fell from 30% to 10%.

•Five sources told Reuters that the ECB is likely to keep rates unchanged next month, though discussions on further cuts could resume in the fall if the eurozone economy weakens.

•ECB President Christine Lagarde said recently in Jackson Hole that the tight monetary policies adopted by the bank in 2022 and 2023 did not lead to recession or sharp increases in unemployment as had historically occurred.