Dollar Consolidates and Gold Steadies as Data Gaps and Political Risk Weigh

Key Takeaways:

*Dollar under pressure – ISM Manufacturing data shows deeper contraction in orders and employment; markets still price ~85–88% chance of a 25 bp Fed cut.

*Gold remains supported – Profit-taking near $4,270 is minor; broader bullish narrative intact due to geopolitical risk, inflation uncertainty, and dollar weakness.

Market Summary:

The U.S. dollar stabilized but remained structurally soft as markets digested a complicated macro mix of weakening U.S. data, shifting rate expectations, and rising political uncertainty dynamics that simultaneously kept gold supported near multi-week highs. Monday’s disappointing ISM Manufacturing PMI, which slipped to 48.2 with both new orders and employment entrenched in contraction, reinforced concerns that U.S. growth momentum is fading. Although the prices index rose to 58.5, hinting at sticky tariff-driven cost pressures, the report did little to challenge expectations for a 25 bp Fed rate cut next week, with markets still pricing an 85–88% probability despite the modest repricing from last week.

Confidence was further shaken by the ongoing data blackout: last week’s delayed NFP and the still-pending Core PCE report have left policymakers “flying blind,” as traders increasingly describe it. Political uncertainty added another layer of pressure after President Trump hinted that Kevin Hassett, a known dove and close ally, could be next in line for Fed Chair, triggering a brief wave of dollar selling before yields stabilized. Some investors still view the dollar as the “cleanest dirty shirt” given resilience in certain pockets of the economy, but with sentiment fragile, the balance of risks remains tilted lower unless upcoming PCE or ISM Services data deliver a meaningful upside surprise.

Gold, meanwhile, eased slightly on profit-taking after touching strong resistance near $4,270, but the broader trend remains firmly constructive. The metal continues to benefit from cooling macro momentum, persistent geopolitical risks, and skepticism over the durability of U.S. inflation as all of which have underpinned safe-haven interest. The mild rebound in Treasury yields and stabilization in the dollar tempered Monday’s surge, while market fatigue from repetitive narratives that Fed cuts, weak data, and U.S. political noise kept gold in a near-term consolidation band.

Still, the setup heading into mid-week looks potentially volatile: a clean break above $4,270 would put the record high at $4,381 back in play, especially if ISM Services or the delayed PCE print reinforce cooling inflation alongside labor-market softness. With the dollar pressured by political uncertainty and incomplete data, and gold supported on dips, both markets now await a condensed cluster of U.S. releases that will dictate the next decisive leg in price action.

Technical Analysis 

DXY, H4: 

The US Dollar Index (DXY) on the chart continues to trade under a weakening structure after decisively breaking below the ascending trendline that had supported price since late September. This breakdown represents a meaningful shift in momentum, and price is now struggling to reclaim the underside of that broken trendline, which is acting as dynamic resistance. The current consolidation just beneath the 99.45 resistance zone shows that bulls are attempting to stabilize the index, but the failure to close back above this level suggests that bearish pressure remains intact. 

Momentum indicators are also soft, with the RSI hovering near the low-40s, showing mild bearish momentum without being oversold, which leaves room for further downside. The MACD histogram has turned slightly positive, hinting at short-term stabilization, but the signal and MACD lines remain below zero, indicating that bullish momentum is still not convincing. 

Resistance Levels: 99.45, 100.25
Support Levels: 99.00, 98.50

GOLD, H4: 

Gold on the chart remains in a constructive medium-term uptrend, supported by the rising trendline that has been respected multiple times since early November. After failing to break above the major resistance around $4,235, price has pulled back and is now trading just above the trendline, suggesting this zone is still acting as strong dynamic support. While the recent rejection from the highs shows sellers defending the upper boundary, the structure has not yet shifted into a bearish reversal, as higher lows continue to form.

The RSI has turned lower from the 60–65 region and is now hovering mid-range, indicating loss of bullish momentum but not oversold conditions. Meanwhile, the MACD shows a fading bullish wave, with histogram bars turning shallow and the signal lines beginning to converge, hinting at slowing upside drive.

Overall, the bias remains cautiously bullish, but momentum indicators warn that the upside may continue to struggle unless fresh buying pressure comes in at current support levels.

Resistance Levels: 4235.00, 4370.00
Support Levels: 4220.00, 4040.00