In the Thursday (15/December) trading session tonight, spot gold prices fell by 1.2% to $1785.36 an ounce. Meanwhile, gold futures slumped by 0.3% to $1794.40. 

The XAU/USD chart below even shows a drop of up to 1.59% to $1778.43, a one-week low. FOMC policy is still hawkish despite the decline in United States Inflation data. 

Interest rates were indeed raised by 50 basis points as expected, but the FOMC confirmed the need for an additional rate hike to 5.1 percent in 2023. It was up from 4.6 percent in projections released in September. 

Fed Chairman Jerome Powell also said that interest rates will be kept at high levels for longer. It is because inflation has not been steadily declining. 

Gold Is Hard to Rise in the Short Term

The inflation data received so far, in October and November, shows a welcome decline amid high inflation conditions. However, it still needs more evidence to give confidence that inflation is on a sustained downward path.

It was shared by Powell said at a post-policy release news conference. The Fed isn't the only central bank still raising interest rates. The European Central Bank and the Bank of England also raised their benchmark interest rates by half a percent today. 

They even indicated the possibility of further hike rates. As a result, the price of gold will find it increasingly difficult to form a recovery. 

The hawkish sentiment from the Fed in terms of rate hikes is still strongly felt by some market participants. That definitely weakens gold as said by independent analyst Ross Norman.

Oil Price can Rise Next Year 

So, again, people are seeing a slightly exaggerated move. However, in general the conditions are that the dollar is rising, interest rates are rising, and all of that is a big drag for gold.

Nevertheless, the price of gold is likely to remain quite high in 2023. Analysts are only pegging their bearish outlook for the short term; at least until the end of this year.

WTI crude is traded around $76 a barrel amid growing concerns around the outlook for demand and supply. According to the International Energy Agency, oil prices next year have the potential to rise as.

It is because the oil demand from China recovers and supply from Russia shrinks due to Western sanctions. This condition is a good thing to have in the market. 

US crude Inventories Gained the Biggest Level

In contrast, OPEC and Goldman Sachs warned that global oil demand could potentially weaken next year. This is in line with the amount of the production that has the potential to fall amid economic uncertainty. 

For now, United States crude inventories reportedly rose by more than 10 million barrels last week. That is actually the biggest gain since March 2021. 

The prospect of supply and demand that is still confusing indicates that the movement of oil prices will continue to be volatile in the near future. That is why; market participants want to wait first. 

Despite market concerns about relatively high United States producer price pressures, focus this week is on the Federal Reserve's interest rate announcement. 

The Fed may Make 50 bps Rate Hike

The economist's consensus gave their advice for Federal Reserve to raise interest rates by 50 bps. It is especually at its last meeting of the year. Carol Kong shared his opinion about it. 

He said that If Powell later alludes more to economic risks, then he think that could be a dovish signal from the Fed. Of course right now the market prefers dovish comments.

People also want to see how the FOMC pays more attention to the risks of an economic downturn. The Bank of England (BoE) and the European Central Bank (ECB) will also hold meetings this week.

They are expected to hike rates of 50 bps each. With the tight schedule of central bank meetings, it is certain that the volatility of the currency market will be strengthening along this week.