Gold Rises Amid Weak Dollar and Looming Rate Cut Expectations

Key Takeaways:

*DXY fell below 100.00 amid dovish Fed commentary and soft U.S. economic data (retail sales, consumer confidence, core PPI).

*Gold rallied to a one-week high as a weaker dollar and lower Treasury yields reduced its opportunity cost.

Market Summary:

The U.S. Dollar Index (DXY) dropped decisively below the 100.00 mark on Tuesday, pressured by a sharp repricing of Federal Reserve policy and a series of disappointing U.S. economic releases. Softer-than-expected September retail sales, a steep decline in the Consumer Confidence Index, and cooler-than-forecast core PPI painted a picture of a weakening economy, pushing the probability of a December rate cut above 80%, up from around 50% just a week ago. Dovish commentary from Fed officials, including Governors Waller and Miran, amplified the dollar’s decline by highlighting labor market softness and calling for near-term easing, overriding prior hawkish signals and prompting a broad retreat across short-term yields.

Gold rallied to a one-week high in tandem with the greenback’s decline, decoupling from falling oil prices and a broader risk-on mood. The weaker dollar and declining Treasury yields lowered the opportunity cost of holding non-yielding bullion, while the rising likelihood of a December Fed cut provided a strong macro tailwind. Investors increasingly view gold as a hedge against potential monetary easing and a softening U.S. economy, even as traditionally bearish factors such as potential de-escalation in Ukraine reducing safe-haven demand and signs of cooling physical demand from China remain in play.

Structural drivers also continue to support gold. Central bank buying has surged, with holdings rising from ~13% of global reserves in 2022 to ~22% in 2025, reflecting a broader trend of de-dollarization and strategic diversification. This persistent demand has created a durable price floor, reinforcing bullion’s long-term appeal despite near-term volatility. In the near term, gold remains highly sensitive to Fed signals and U.S. economic data, with a confirmed dovish pivot likely to push prices higher, while any hesitation from policymakers could cap gains.

Geopolitical sentiment further intertwines the narratives of the dollar and gold. Optimism over a potential Ukraine-Russia peace deal has weakened the dollar’s safe-haven appeal, boosting capital flows into risk-sensitive currencies like the euro and British pound, while simultaneously reducing one of gold’s traditional support factors. Ultimately, the medium-term trajectory of both the dollar and gold will hinge on confirmation of the Fed’s dovish shift, the appointment of the next Fed Chair, and upcoming economic releases, as markets weigh monetary policy, structural demand, and geopolitical developments in tandem.

Technical Analysis

DXY, H4

DXY has extended its pullback after losing momentum near the 100.30 resistance zone, with price now sliding into the key support area around 99.55. The breakdown from the rising trendline confirms that bullish structure has weakened in the short term, and sellers have gained control as long as DXY remains below the 100.00–100.30 band.

RSI has dropped sharply to the low-40s, highlighting a clear momentum reversal from overbought conditions earlier in the week. While not oversold, the indicator is approaching a zone where previous rebounds have formed, suggesting the downside may begin to moderate. MACD continues to print expanding red histogram bars, with both the MACD and signal lines angled lower confirming that bearish momentum is intact, though the pace of decline is starting to slow.

Resistance level: 100.30, 101.10

Support level: 99.55, 98.70

GOLD, H4

Gold is trading with a steady upward bias on the chart, but momentum has noticeably slowed as price approaches the 4,130–4,170 resistance band. This zone has acted as a significant supply area during previous rallies, especially after the double-top rejection near 4,370, and the market is now retesting it from below without clear conviction.

The recent advance from the 4,020 support has been constructive, forming a series of higher lows. However, the candles are showing smaller bodies and longer wicks, suggesting buyers are becoming less aggressive as price presses into overhead supply. 

RSI is hovering around the mid-50s, reflecting moderate bullish momentum but not an overextended market. The indicator is flattening, which often signals a cooling phase after a recovery swing. Meanwhile, MACD is positive, with the MACD line above the signal line and green histogram bars continuing to print indicating that momentum is still in favor of buyers, though histogram growth is modest rather than accelerating.

Resistance level: 4220.00, 4370.00

Support level: 4085.00, 3925.00