Oil prices held steady on Wednesday as traders monitored any progress in peace talks between Russia and Ukraine, while awaiting the Federal Reserve’s interest-rate decision.

After falling around 1% in the previous session, Brent crude rose $0.07, or 0.1%, to $62.01 a barrel by 10:39 GMT. US West Texas Intermediate gained $0.10, or 0.2%, to $58.35 a barrel.

Two market sources citing American Petroleum Institute data said Tuesday that US crude inventories fell by 4.78 million barrels last week, while gasoline stockpiles rose by 7 million barrels and distillate inventories increased by 1.03 million barrels. Official government data is due at 15:30 GMT.

Meanwhile, investors broadly expected the Federal Reserve to cut its benchmark rate by a quarter point on Wednesday to support a cooling labor market.

Lower interest rates can boost oil demand by stimulating economic growth, though gains remain capped by concerns that supply may outpace consumption. Analysts at ING noted that the oil market is moving toward a larger surplus, while Russian supply remains a key risk.

Ukrainian President Volodymyr Zelensky said his country and its European partners will soon provide the United States with “revised documents” for a peace proposal aimed at ending the war with Russia.

A peace agreement between Russia and Ukraine could lead to a lifting of international sanctions on Russian companies, potentially freeing up currently restricted oil supply.

Separately, the US Energy Information Administration said it expects US oil production to rise more than previously forecast this year. It raised its 2025 output estimate by 20,000 barrels to a record average of 13.61 million barrels per day, but cut its 2026 forecast by 50,000 barrels to 13.53 million barrels per day.

Sterling edged slightly higher against the US dollar and held broadly steady versus the euro on Wednesday, as investors awaited the Federal Reserve’s policy decision later in the session, along with UK GDP data due on Friday.

The US dollar weakened against both the euro and the yen as markets positioned for an interest-rate cut accompanied by a potentially hawkish message from the Fed.

The pound rose 0.10% against the dollar to 1.3313, after touching 1.3385 last week — its highest level since 21 October. The currency has gained about 1% since Finance Minister Rachel Reeves delivered the budget on 26 November.

Francesca Fornasari, head of currency at Insight Investment, said sterling had benefited from “post-budget relief,” noting that “a lot of bad news was already priced in before 26 November.”

Looking ahead, she added that the pound will need stronger growth-related data to outperform its European peers.

Some analysts pointed to modestly positive revisions to last week’s PMI figures, suggesting that the UK economy is not slowing as sharply as previously feared. Meanwhile, several companies reported delaying investment due to uncertainty surrounding Reeves’ budget.

Expectations for the UK’s growth outlook remain mixed.

Mark Dowding, chief investment officer at BlueBay at RBC BlueBay Asset Management, said: “Weaker UK growth expectations suggest there is room for the Bank of England to surprise markets with more rate cuts than currently priced in.”

UK GDP figures will be released on Friday.

Investors are also awaiting next week’s Bank of England rate decision. Several policymakers expressed differing views on Tuesday regarding the future of monetary policy, highlighting the continued division within the Monetary Policy Committee.

Markets are pricing a 50-basis-point cut by next summer, alongside a roughly 90% probability of a rate reduction next week.

The euro inched up 0.02% against sterling to 87.43 pence, after reaching 87.21 pence on Tuesday — its lowest level since 24 October.

Money markets have recently scaled back expectations for a potential rate cut from the European Central Bank, offering support to the euro.

Gold prices rose in the European market on Wednesday, extending gains for a second consecutive session, supported by a pause in the US dollar’s advance against a basket of major currencies and by a modest uptick in safe-haven buying of the metal.

However, the current rise remains limited as investors stay cautious ahead of the final Federal Reserve policy decision of the year. The central bank is widely expected to announce a third consecutive 25-basis-point rate cut, along with key updates on the projected path of interest rates through 2026.

Price Overview

• Gold prices today: Gold rose 0.3% to $4218.85 from an opening level of $4207.68, after hitting a low of $4201.12.

• At Tuesday’s settlement, gold gained 0.45% — its first increase in three sessions — with safe-haven inflows providing modest support.

US Dollar

The dollar index fell 0.2% on Wednesday, retreating from a one-week high and heading toward its first loss in three sessions, reflecting a pause in the US currency’s recent upward momentum.

Federal Reserve

The Federal Reserve concludes its final policy meeting of 2025 later today, with expectations pointing to a 25-basis-point cut in the federal funds rate — the third consecutive reduction this year.

The interest-rate decision, monetary-policy statement, and updated economic projections will be released at 19:00 GMT, followed by Chair Jerome Powell’s press conference at 19:30 GMT.

These updates are expected to offer stronger clarity on the direction of monetary policy and the likelihood of further rate cuts in 2026.

Kevin Hassett — the White House’s senior economic adviser and the leading candidate to succeed Powell — said Tuesday that there is “plenty of room” for deeper rate cuts, although persistently high inflation may alter the calculus.

Gold Outlook

• Kelvin Wong, market analyst for Asia-Pacific at OANDA, said investors are significantly repositioning ahead of the Fed’s policy decision.

• At FX News Today, our view is as follows: If the Fed’s updates and messaging turn out more aggressive than markets currently expect, the probability of additional rate cuts in 2026 may decline, placing stronger downward pressure on gold.

SPDR Fund

Holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — fell by 1.14 metric tons on Tuesday, marking a third consecutive daily decline. Total holdings now stand at 1,047.97 metric tons, the lowest since December 3.

The euro edged higher in European trading on Wednesday against a basket of global currencies, marking its first positive move against the US dollar in five sessions. The advance came as the dollar’s recent upward momentum paused ahead of the Federal Reserve’s policy decision due later today.

With market expectations for a European rate cut in December fading, investors are also awaiting comments from European Central Bank President Christine Lagarde, who will participate in a panel discussion on the future of the euro and the dollar as global reserve currencies at the Financial Times Global Conference.

Investors hope Lagarde will offer clearer signals on the ECB’s policy outlook for 2026, especially as several eurozone economic indicators have shown notable improvement in recent weeks.

Price Overview

• Euro exchange rate today: the euro rose by less than 0.1% to $1.1629, from the opening level of $1.1625, and recorded a low of $1.1622.

• The euro ended Tuesday’s session down 0.1% against the dollar, marking a fourth consecutive daily loss, after strong US job-openings data.

US Dollar

The dollar index fell about 0.1% on Wednesday, retreating from a one-week high and heading toward its first loss in three sessions, reflecting a pause in the US currency’s recent rise against global peers.

Attention turns to the Federal Reserve’s decision later today, with markets nearly fully pricing in a 25-basis-point rate cut — the third consecutive cut this year.

Investors will scrutinize the Fed statement and policymakers’ projections for indications on the 2026 policy path, particularly amid easing inflation pressures and persistent concerns over economic growth.

European Interest Rates

• Money-market pricing for a 25-basis-point ECB rate cut in December remains below 10%.

• Reuters reported that ECB officials lean toward keeping interest rates unchanged at the December meeting.

Christine Lagarde

At 10:55 GMT, ECB President Christine Lagarde is scheduled to speak at the Financial Times Global Conference.

Euro Outlook

At Economies.com, we expect that if Lagarde delivers more hawkish remarks, market expectations for ECB rate cuts in the first half of next year will decline, providing additional support for the euro against the US dollar.