Dollar Under Pressure, Gold Supported Amid U.S. Policy Uncertainty

Key Takeaways:

*Fed policy uncertainty, dovish signals from Governor Miran, and a prolonged U.S. government shutdown are pressuring the dollar.

*Conflicting views from officials like Hammack and Jefferson create a “wait-and-see” environment, capping dollars upside.

*High deficits, shutdown-related economic drag, and political uncertainty bolster gold’s appeal as a safe-haven asset.

Market Summary:

The U.S. dollar drifted lower this week as investors balanced resilient domestic economic signals against mounting policy and political uncertainties. Markets remain focused on the Federal Reserve’s December meeting, where Governor Miran’s call for potential rate cuts has reinforced expectations of an easing cycle. However, dissenting voices from Cleveland Fed President Beth Hammack and Vice Chair Jefferson underscore the internal debate over both the pace and magnitude of cuts, keeping the greenback in a fragile, range-bound position.

Adding to the dollar’s headwinds is the prolonged government shutdown, now in its sixth week, which the Congressional Budget Office estimates could shave 1–2 percentage points off Q4 GDP. Federal worker furloughs, disruption to small-business lending, and suspended air travel are creating tangible economic drag, while President Trump’s proposed $2,000-per-person dividend has reignited fiscal sustainability concerns. Fed officials, including Musalem, have cautioned that soaring deficits could weigh on long-term confidence in U.S. assets, adding a structural layer of uncertainty for the currency.

Against this backdrop, gold has found support from the dollar’s softness and heightened safe-haven demand. The prolonged shutdown and fiscal strain amplify traditional drivers for non-yielding assets, while policy uncertainty within the Fed highlighted by the stark divergence between hawkish and dovish officials reinforces gold’s appeal. Nonetheless, gains are tempered by improving risk sentiment and hawkish rhetoric keeping real yields elevated; the absence of acute geopolitical shocks limits urgent safe-haven flows.

Looking ahead, the dollar and gold will remain tightly linked to developments in U.S. policy and politics. A resolution to the government shutdown could bolster the greenback and temper gold’s near-term upside, while renewed fiscal or policy uncertainty would likely continue to underpin the metal. For now, the market is navigating a delicate equilibrium between safe-haven demand, policy divergence, and structural fiscal concerns, leaving both the dollar and gold sensitive to headline risks and data surprises.

Technical Analysis

Dollar Index, H4

The DXY has been showing signs of a short-term pullback after reaching the 100.25 resistance area, where strong selling pressure emerged. The index retraced to test the 99.50 support zone, which coincides with the 100-period moving average, and has since shown mild signs of stabilization. However, the current structure remains slightly tilted to the downside as long as the price holds below the 100.00 psychological level. A sustained move below 99.50 could open the door for further declines toward the next support levels at 98.80 and 98.15.

From a momentum perspective, both the RSI and MACD reflect weakening bullish strength. The RSI currently sits around 45, hovering near the neutral zone, indicating that buyers have lost control and momentum is gradually shifting toward sellers. Meanwhile, the MACD remains below its signal line with a slightly negative histogram, reinforcing the cautious tone.

In summary, DXY’s broader uptrend remains intact, but short-term sentiment appears corrective. A rebound above 100.25 would be required to confirm a resumption of the bullish move toward 101.30, while a breakdown below 99.50 would likely trigger a deeper correction toward 98.80 or lower.

Resistance Levels: 100.25, 101.30
Support Levels:  99.50, 98.80

Gold, H4

Gold continues to consolidate after a sharp decline from the 4,365 resistance area, where a double-top pattern had formed earlier, signaling a bearish reversal. The break below the rising trendline added further downward pressure, leading prices toward the 3,920 support level. Recently, XAU/USD has been trading sideways between 3,920 and 4,035, suggesting market indecision as traders await a fresh catalyst. The 50-period moving average has flattened, while the 200-period MA remains above current price levels, indicating that the medium-term structure is still bearish despite short-term stabilization.

Momentum indicators provide mixed signals. The RSI is hovering near the 52 level, reflecting a neutral bias with no clear momentum dominance from either side. Meanwhile, the MACD shows a mild bullish crossover above the signal line, but momentum remains weak, indicating limited upside strength.

Resistance Levels: 4035.00, 4135.00
Support Levels: 3920.00, 3840.00