Oil prices tumbled 3% in European trade to two-week lows under pressure from weaker global demand on fuel. 

Prices are also pressured by a surge in dollar's valuation against major rivals, making commodities costlier to holders of other currencies. 

Global Prices

US crude fell 3.7% to $82.11 a barrel, the lowest in two weeks, while Brent declined 2.9% to $88.54 a barrel, the lowest since September 8. 

US crude rose 0.2% on Friday, while Brent added 0.7%, on short-covering after sustaining hefty losses. 

Oil prices are down 0.8% so far this week on track for the third weekly loss in a row. 

Global Demand

The International Energy Agency expects fuel demand to stop growing in the fourth quarter due to an expected global recession as central banks tighten monetary policies. 

In China, the world's second largest fuel consumer, demand remains weak due to continuous Covid 19 restrictions and a slowdown in industrial activities. 

The Dollar

The dollar index rose 0.5% on Monday against a basket of major rivals, in turn pressuring dollar-denominated oil futures. 

The spike comes after US 10-year treasury yields surpassed 3.5% for the first time since 2011. 

Tomorrow, the Federal Reserve will convene to discuss policies, while expected to increase interest rates by 75 basis points to 3.25%. 

US 10-year treasury yields spiked over 2% on Monday past 3.5% for the first time in 11 years ahead of the Federal Reserve's meeting. 

10-year US treasury yields reached 3.518%, the highest since April 2011. 

Dollar rose in European trade against a basket of major rivals on track for 20-year highs ahead of the Federal Reserve's policy meeting. 

Gains came as US 10-year treasury yields spiked to three-month highs, with the Fed expected to increase interest rates by 75 basis points for the third meeting in a row. 

The Index

The dollar index rose 0.5% on Friday to 110.18, after falling 0.1% on Friday away from a week high at 110.26. 

The dollar index rose 0.6% last week, the fourth weekly profit in the last five, away from 20-year highs at 110.79. 

The Fed 

Such gains come ahead of the Federal Reserve's policy meeting tomorrow, expected to increase interest rates by 75 basis points to 3.25%.

That would be the third such hike, and the fifth overall, in row, as the Fed continues its aggressive attempts to tame inflation.

US Yields

US 10-year treasury yields rose 1.3% to three-month highs at 3.494%, bolstering dollar's standing. 

US yields are about to surpass 3.5% for the first time since 2011 as the Fed is expected to continue to aggressively tighten monetary policies until next March.

Gold prices fell in European trade, almost hitting 29-month lows as the dollar index gained ground ahead of the Federal Reserve's meeting. 

Gold is also pressured by global central banks, which are expected to keep moving heavily this week to control record inflation, through policy tightening. 

Gold Prices

Gold prices fell 0.9% to $1,659 an ounce, after rising 0.6% on Friday, the first profit in four days away from 29-month lows at $1,654 an ounce. 

Gold prices lost 2.5% last week, the fourth weekly loss in the last five weeks, as US 10-year treasury yields spike following US inflation data. 

The Dollar

The dollar index rose over 0.4% on Monday against a basket of major rivals, pressuring gold futures as they become costlier to other people. 

Such gains come ahead of the Federal Reserve's policy meeting tomorrow, expected to increase interest rates by 75 basis points to 3.25%.

That would be the third such hike, and the fifth overall, in row, as the Fed continues its aggressive attempts to tame inflation. 

Global Central Banks

Aside from Fed's meeting, other major central banks in Britain, Japan, and Switzerland are convening as well next Thursday. 

It's unlikely the BoJ will change its current ultra-easy policies, while the Swiss central bank is expected to raise interest rates by 75 basis points to 0.5%. 

Bank of England is also expected to increase interest rates, either by 50 or 75 basis points. 

Estimates 

Analysts expect prices to hover around $1,680 in the short term, while a steep rate hike by the Federal Reserve is expected to send prices towards $1,650. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.16 tones on Friday, to a total of 960.85 tones, near a two-year tones.