Dollar Holds Firm, Gold Faces Pressure Ahead of Today’s NFP

Key Takeaways:

*Dollar: Consolidates near multi-week highs on hawkish Fed signals and fading December rate-cut expectations;

*Gold: Edges lower as a stronger dollar, fading Fed easing bets, and weak physical demand weigh on prices; safe-haven flows provide limited support.

*Market Dynamics: Dollar strength continues to pressure gold, while upcoming labor-market data and Fed commentary remain the primary catalysts for near-term moves in both markets.

Market Summary:

The U.S. Dollar Index (DXY) remains near multi-week highs as markets absorb hawkish signals from the Federal Reserve. Recent FOMC minutes revealed a sharp decline in December rate-cut expectations, now around 33%, down from roughly 50% just days ago. This shift, supported by higher Treasury yields and the absence of near-term monetary easing, has bolstered the dollar amid ongoing uncertainty. A subdued U.S. data calendar adds to the cautious tone, reinforcing the greenback’s safe-haven appeal in a market still navigating mixed signals and elevated volatility.

Gold, by contrast, has faced pressure from the firmer dollar and fading expectations of an imminent Fed easing. Weak physical demand, particularly in India where jewellery purchases fell sharply, has also weighed on bullion. While equity softness and lingering geopolitical tensions provide intermittent support, structural headwinds have limited upside gains. Investors are closely watching the delayed U.S. labor-market releases, including today’s Nonfarm Payrolls, which could swing sentiment in either direction: weaker-than-expected results may lift gold, while stronger numbers would likely reinforce dollar strength and cap bullion’s upside.

The interplay between the two assets underscores the market’s sensitivity to monetary policy and macro data. The dollar’s continued resilience exerts downward pressure on gold, while the precious metal remains a barometer for risk-off sentiment amid geopolitical uncertainty and equity market volatility. Traders are now positioning for a pivotal week of labor-market data and potential Fed commentary, both of which could redefine near-term trends for the greenback and gold alike.

In the near term, the dollar is expected to remain supported unless labor-market surprises or a shift in risk appetite emerge, while gold’s trajectory will continue to be dictated by the dollar’s strength, Fed policy expectations, and safe-haven demand. The balance between macroeconomic fundamentals and investor sentiment will be crucial in shaping both markets into the week ahead.

Technical Analysis 

DXY, H4

The DXY has surged sharply and broken above the key resistance zone around 99.60, marking a strong bullish continuation after rebounding from the rising trendline drawn from mid-September. This breakout confirms renewed dollar strength, with momentum strong enough to invalidate the recent consolidation structure. Price is now approaching the next major resistance level near 100.25, which represents an upper boundary that previously triggered several reversals. If bullish pressure remains intact, DXY may attempt to test or even briefly pierce this level, though profit-taking could occur given the speed of the recent rally.

The indicators support the ongoing bullish narrative but also suggest the market may be entering overextended conditions. The RSI has climbed to approximately 73, placing it firmly in overbought territory highlighting that the current push is strong but may not be sustainable without a corrective pullback. The MACD histogram shows accelerating upside momentum, with the MACD and signal line expanding upward in wide separation, confirming strong short-term buying power. However, such steep momentum often precedes cooling phases once price meets higher-timeframe resistance.

Resistance level: 100.25, 101.10

Support level:99.60, 98.70

GOLD, H4

Gold is currently trading near 4090, where price is trying to break back above a key horizontal resistance zone marked around 4130. This level previously acted as support before the breakdown, so it now serves as a strong retest area in the form of resistance. The chart also shows a descending trendline from the recent swing high, and price is pressing directly into that trendline, creating a confluence barrier. Until gold can close decisively above both the orange descending trendline and the 4130 horizontal zone, upside momentum remains limited and prone to rejection.

From an indicator perspective, the RSI is hovering around 50, suggesting neutral momentum and no clear directional dominance. The MACD remains below the zero line with the histogram slightly negative, indicating that bearish pressure still lingers even though momentum is beginning to stabilize. For a bullish continuation signal, the MACD would need to cross its signal line upward with a widening histogram, ideally alongside a breakout above the trendline.

In summary, gold is at a technical crossroads: a clean break above 4130 would open the way toward 4270, while rejection from the current trendline keeps the metal vulnerable to another pullback toward 4030. This level will likely determine the next directional move.

Resistance level: 4130.00, 4270.00

Support level: 3870.00, 3795.00