Powell Opens Door to September Rate Cut

Key Takeaways:

*Dollar weakened as soft U.S. data and dovish Fed expectations weighed, with fiscal concerns adding longer-term downside risk.

*Gold extended gains on dollar softness, lower yields, and lingering geopolitical uncertainty, sustaining its role as a hedge.

*Upcoming U.S. core PCE data and Fed guidance remain key drivers, with risks tilted toward renewed dollar strength if policy signals turn hawkish.

Market Summary:

The U.S. Dollar Index slipped as weaker U.S. data and shifting Fed expectations weighed on sentiment. Softer PMI and housing figures have reinforced bets for policy easing later this year, dragging on the greenback ahead of the Fed’s preferred inflation gauge, the core PCE index. Fiscal concerns are also creeping back, with rising debt levels and widening deficits raising doubts about the dollar’s longer-term stability.

Geopolitical developments have added another layer of pressure. Reports of progress toward a ceasefire between Israel and Iran eased safe-haven demand for the dollar, though Tehran’s silence keeps the risk of renewed tensions alive. This has left the greenback struggling for direction, caught between fading domestic support and fragile geopolitical flows.

Gold, meanwhile, has extended gains as a weaker dollar and softer Treasury yields boosted demand. Dovish Fed repricing has reduced the opportunity cost of holding the metal, while concerns over U.S. fiscal sustainability and lingering geopolitical risks underpin its role as a hedge. Even with easing Middle East tensions, investors remain wary of potential flare-ups, keeping safe-haven demand in play.

Looking ahead, gold’s trajectory hinges on the balance between Fed policy signals and geopolitical calm. A softer PCE print could deepen dollar weakness and lift gold, while a hawkish Fed tone, easing geopolitical tensions, or renewed dollar strength could trigger selling pressure in the metal and restore some support for the greenback.

Technical Analysis

DXY, H4

U.S. Dollar Index (DXY) is trading near 98.10 after sliding sharply from the 99.05 resistance area, with price now hovering just above key support at 97.75. The recent rejection has kept the index below both the 20- and 50-period moving averages, reinforcing the near-term bearish bias. Immediate resistance has shifted lower toward 98.30, which now acts as the first barrier for any recovery attempt.

Momentum indicators remain tilted to the downside. The Relative Strength Index (RSI) is holding at 41, signaling weakening momentum while staying above oversold territory. The MACD continues to track in negative territory, with a bearish histogram confirming that sellers retain control.

On the downside, a decisive break below 97.75 would expose the 97.10 support, and further weakness could drive a deeper retracement toward the 96.50 region. On the upside, a sustained close back above 98.30 would ease immediate pressure and open the way for a rebound toward 99.05 if momentum strengthens.

Resistance levels: 98.30, 99.05
Support levels: 97.75, 97.10

XAUUSD, H4

Gold (XAU/USD) is trading near $3,364 after staging a strong rebound from the $3,320 support zone, breaking above its recent descending trendline. The recovery has pushed the metal back above the 20- and 50-period moving averages, with the breakout area around $3,342 now acting as immediate support. Price action remains constructive, with bulls eyeing the $3,400 resistance level, followed by $3,435 if momentum continues to build.

Momentum indicators favor the bullish outlook. The Relative Strength Index (RSI) has climbed to 62, signaling strengthening upside momentum while still leaving room before overbought territory. The MACD has flipped into positive territory, with a bullish crossover confirmed as the histogram turns green, indicating a shift in momentum toward buyers. Volume also picked up notably during the breakout, reinforcing market conviction behind the move.

On the upside, a decisive close above $3,400 would open the way for a retest of $3,435 and potentially higher extensions. On the downside, initial support rests at $3,350, followed by $3,320 and the stronger floor at $3,280. A break below these levels would expose the metal to deeper retracement, potentially invalidating the bullish breakout.

Resistance levels: 3400.00, 3435.00
Support levels: 3350.00, 3320.00