By Nicole Jao

NEW YORK (Reuters) -Oil prices edged lower on Monday in thin trade ahead of the Christmas holiday on concerns about a supply surplus next year and a strengthened dollar.

futures settled down 31 cents, or 0.43%, at $72.63 a barrel. U.S. West Texas Intermediate crude futures fell 22 cents, or 0.32%, to $69.24 a barrel.

Macquarie analysts projected a growing supply surplus for next year, which will hold Brent prices to an average of $70.50 a barrel, down from this year’s average of $79.64, they said in a December report.

Concerns about European supply eased on reports the Druzhba pipeline, which sends Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, has restarted after halting on Thursday due to technical problems at a Russian pumping station.

The U.S. dollar was hovering around two-year highs on Monday morning, after hitting that milestone on Friday.

“With the U.S. dollar changing from weaker to stronger, oil prices have given up earlier gains,” UBS analyst Giovanni Staunovo said.

A stronger dollar makes oil more expensive for holders of other currencies.

On Friday, U.S. data that showed cooling inflation helped alleviate concerns after the Federal Reserve interest rate cut last week.

“With the Fed sending mixed signals and some of these economic data points not being all that robust, the market is listless,” said John Kilduff, partner at Again Capital in New York.

Brent futures fell by around 2.1% last week, while WTI futures lost 2.6%, on concerns about global economic growth and oil demand after the U.S. central bank signalled caution over further easing of monetary policy.

Research from Asia’s top refiner Sinopec (OTC:) pointing to China’s oil consumption peaking in 2027 also weighed on prices.

U.S. President-elect Donald Trump on Friday urged the European Union to increase U.S. oil and gas imports or face tariffs on the bloc’s exports.

Trump also threatened to reassert U.S. control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.

Investing.com– Gold prices edged higher on Tuesday, extending their tepid performance as investors still remained cautious with the rising dollar following the U.S. Federal Reserve’s hawkish tilt.

Traders also refrained from placing large bets ahead of a shortened trading week due to the Christmas holiday.

inched up 0.2% to $2,616.95 per ounce, while expiring in February ticked up 0.2% to $2,633.89 an ounce.

The yellow metal had inched up 0.3% on Monday, after losing more than 1% in the previous week, reflecting uncertainty about the metal’s outlook.

Bullion under pressure on Fed rate outlook

Gold prices had hit a one-month low on Wednesday, as the Fed meeting indicated that rates will remain higher for a longer period after Wednesday’s cut. 

Prices have failed to fully recover from it and have seen subdued moves as investors still assessed the implications of the Fed’s rate outlook. 

Higher interest rates put downward pressure on gold as, as the opportunity cost of holding gold increases, making it more attractive compared to interest-bearing assets like bonds.

Traders are now expecting only two quarter-point reductions in 2025 amid continued economic resilience and still-elevated inflation. This compares to expectations of four rate cuts before the Fed meeting.

Strong dollar creates downward pressure on gold, other metals

The Fed’s hawkish shift provided renewed strength to the U.S. dollar, as higher interest rates make the greenback more attractive due to increased returns on dollar-denominated assets.

The  rose 0.1% in Asia hours on Tuesday and hovered near a two-year high it reached last week.

A stronger dollar often weighs on gold prices as it makes the yellow metal more expensive for buyers using other currencies.

Other precious metals were largely muted. inched up 1.2% to $960.15 an ounce, while gained 0.3% to $30.265 an ounce.

Copper subdued on strong dollar, seasonal factors

Among industrial metals, copper prices were subdued and moved within tight ranges on Tuesday as a strong greenback weighed on the red metal.

Analysts attributed the weakness in copper to seasonal sluggishness as industrial production and construction projects often slow down as businesses and projects prepare for year-end closures and holidays.

Benchmark on the London Metal Exchange were largely unchanged at $8,954.50 a ton, while one-month were 0.5% higher at $4.1045 a pound.