Dollar Stabilizes, Gold Extends Gains Ahead of U.S. CPI

Key Takeaways:

*DXY retreated early in the U.S.–Asia session on softer macro signals and Fed easing speculation, but later edged higher amid modest yield gains and equity risk-off, showing its dual role as a yield-sensitive.

*Gold supported by safe-haven flows: Gold extended gains on early dollar weakness, geopolitical uncertainty, and AI/tech equity volatility, reinforced by expectations of Fed easing and contained real yields.

Market Summary:

The U.S. dollar and gold traded on opposing trajectories as markets navigated a shifting macro backdrop ahead of today’s U.S. Consumer Price Index (CPI) release. The Dollar Index (DXY) showed a soft-to-firm intraday pattern, retreating during the early U.S.–Asia session before stabilising and edging higher toward midnight, as investors reassessed the balance between cooling U.S. growth signals and Federal Reserve policy expectations. The initial pullback in the greenback followed mixed U.S. macro data, reinforcing speculation that the Fed is approaching the later stages of its easing cycle. Softer labour-market momentum and easing inflation pressures kept front-end Treasury yields capped, encouraging profit-taking after recent gains.

The dollar later found support as markets digested the data more carefully and trimmed aggressive rate-cut expectations ahead of CPI. A modest uptick in U.S. yields, coupled with deteriorating risk sentiment from renewed weakness in AI-linked equities, revived defensive demand for the greenback. This risk-off undertone helped the dollar recover lost ground, highlighting its dual role as both a yield-sensitive and safe-haven currency.

Gold, by contrast, extended its upward momentum as early dollar weakness, persistent geopolitical uncertainty, and rising equity-market volatility reinforced demand for defensive assets. Expectations of a further moderation in inflation strengthened views that U.S. monetary policy is moving closer to an extended easing phase, keeping real yields constrained and reducing the opportunity cost of holding non-yielding assets. The selloff in AI-related equities also prompted portfolio reallocation into safe havens, adding to gold’s appeal. Geopolitical risks continue to support gold prices. While sporadic signs of de-escalation have emerged, uncertainty around energy supply routes, sanctions, and broader geopolitical alignments remains elevated. As markets turn to today’s CPI print, the outcome will be pivotal: a softer reading would likely reinforce easing expectations, weighing on the dollar and extending gold’s advance, while any upside surprise could revive yields, stabilize the greenback, and temper gold’s rally. Until then, both markets remain tightly anchored to inflation dynamics and broader risk sentiment. 

 Technical Analysis 

DXY, H4: 

The US Dollar Index remains under near-term pressure on the chart following its rejection from the 100.25 resistance level, which has acted as a key supply area after the earlier rally. Price has since slipped below the rising trendline support, signaling a loss of upside momentum and a shift into a corrective phase rather than an immediate trend reversal. The recent rebound from the 98.10 region appears corrective in nature, with broader structure turning neutral-to-bearish unless stronger follow-through buying emerges.

Momentum indicators point to stabilizing but still fragile conditions. The RSI has recovered from oversold levels and is now hovering around the mid-40s to near-50, suggesting a momentum reset rather than a strong bullish reversal. Meanwhile, the MACD has started to curl higher with a moderating bearish histogram, indicating selling pressure is easing, though a confirmed bullish crossover has yet to materialize.

Resistance Levels: 98.55, 99.05

Support Levels: 98.10, 97.55

GOLD, H4: 

Gold remains constructive on the chart as price continues to build higher following the recent breakout above the 4,280 resistance level, which has now turned into a key demand area. After consolidating in a series of higher lows, price has pushed back toward the upper resistance band near 4,350, suggesting renewed bullish intent rather than a short-lived rebound. 

Momentum indicators remain supportive. The RSI is holding in the low-to-mid 60s, reflecting strong bullish momentum without entering extreme overbought conditions, suggesting room for further upside. Meanwhile, the MACD remains in positive territory with a stable histogram, indicating that upside momentum is still present despite some short-term consolidation.

Resistance Levels: 4,350.00, 4,400.00
Support Levels: 4,320.00, 4,280.00