Gold is headed for a monthly decline, with heavy anticipation for the US Federal Reserve decision

Gold is heading for its first monthly decline in four months as investors reduce their bets on aggressive and deep cuts in US interest rates, hours before the Federal Reserve’s monetary policy decision later today.

Gold and the dollar now

Gold futures are now up about 0.22% to $2,055 an ounce.

Spot gold contracts are stable at $2,037 an ounce, down about 1.3% in January so far.

On the other hand, the dollar index is up 0.25% to 103.46 points.

Other metals

Spot silver prices fell 0.4% to $23.07 an ounce, while platinum fell 0.3% to $918.36, and palladium held steady at $976.07.

Dollar rises ahead of Fed decision

The dollar is on track to achieve its biggest monthly gain since September as the yen moves towards its biggest drop in more than a year with traders awaiting today’s US interest rate decision.

The sharp slowdown in inflation in Australia pushed the Australian dollar down 0.5% to $0.6567 and bonds rose as investors continued to bet on rate cuts.

The dollar rose slightly to 1.0817 per euro and held steady at 147.67 yen in Asian trading.

The dollar has risen 2.2% against a basket of major currencies this month as markets have scaled back expectations on the speed and size of rate cuts amid strong US economic data and resistance from central bank governors.

The yen has fallen more than 4.5% against the dollar this month and is on track for its biggest monthly decline since June 2022, as weak wage data and slowing inflation leave room for the Bank of Japan to delay raising interest rates.

Oil falls in Asian trading despite rising tensions in the Middle East

Oil prices rose in early Asian trading on Wednesday amid continued underlying bearish factors, after gains in the previous session amid rising tensions in the Middle East.

Brent crude futures for March, which expire today, fell 37 cents to $82.50 a barrel, while the more actively traded April contract fell 24 cents to $82.26 a barrel.

Currently, for oil, the bloody drone attack on US forces near the Jordanian-Syrian border last week ignited the markets, and the markets expect a strong military response from the United States to the drone attack. It is still possible to push the market up.”

President Joe Biden said he had decided how to respond to the attack without providing further details, but added that he wanted to avoid a wider war in the Middle East.

The Iraqi armed group Kataib Hezbollah, which is allied with Iran, announced on Tuesday that it was suspending all military operations against US forces in the region. The US Department of Defense indicated that the group may be behind the attacks, although a final assessment has not been reached.

In the Israeli-Palestinian conflict, Hamas said it had received a proposal for a ceasefire and was studying it. This is the most serious peace initiative so far since the only short-lived ceasefire in the war, which collapsed in November.

A ceasefire in Gaza would stop Houthi attacks on ships in the Red Sea, thus restoring global shipping and oil trade, which would bring oil prices down again.

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