Resilient U.S. Economy Keeps Dollar Bid, Gold Trapped in Range

Key Takeaways:

*Chicago PMI improves: October reading rose to 43.8 (prev. 40.6), signaling tentative stabilization in U.S. manufacturing.

*Fed patience supports dollar: Policymakers maintain “higher-for-longer” guidance, anchoring the greenback.

*Gold steadied : Safe-haven demand faded as geopolitical risks eased, but central-bank buying underpins the metal.

Market Summary: 

The U.S. dollar has steadied in recent sessions as traders recalibrate expectations for Federal Reserve policy amid mixed economic signals including the October Chicago PMI rose modestly to 43.8 from 40.6, signaling that U.S. manufacturing conditions remain weak but may be stabilizing after months of contraction. The uptick added to the narrative that while industrial activity is subdued, the broader economy continues to outperform its peers, reinforcing the Fed’s patient stance on policy easing. Nonetheless, markets continue to price in a “higher for longer” stance from the Federal Reserve, with policymakers emphasizing the need for more evidence of sustained disinflation before pivoting toward rate cuts. This cautious tone has kept the dollar underpinned even as Treasury yields eased modestly from recent peaks.

At the same time, global risk sentiment and geopolitical shifts continue to influence dollar flows. The recent ceasefire between Israel and Iran reduced safe-haven demand for the greenback, though ongoing tensions in Eastern Europe and uncertainty over U.S. fiscal negotiations still provide intermittent support. A firmer dollar, however, has weighed on commodities priced in USD, particularly gold, which often moves inversely to the currency’s strength.

Gold prices have remained range-bound near $3,960/oz as investors balance declining geopolitical risk premiums against steady Treasury yields and a cautious Fed. The metal briefly lost momentum following the Middle East truce, but underlying demand from central banks and lingering inflation concerns have prevented a deeper correction. Market sentiment suggests that if the Fed turns more dovish or U.S. data softens materially, gold could regain traction as a hedge against policy and market uncertainty.

Overall, the dollar and gold remain in a tactical equilibrium that are each supported by different macro dynamics. The dollar draws strength from relative growth resilience and Fed caution, while gold benefits from its defensive appeal and global monetary diversification. Markets will look to upcoming U.S. data and Fed commentary for direction, with any signs of cooling activity or weaker inflation likely to tilt the balance in favor of gold.

Technical Analysis

DOLLAR_INDX, H4

The US Dollar Index has extended its bullish continuation structure, pushing into a key resistance zone near 100.20 after reclaiming the prior ascending trendline and invalidating the recent pullback phase. This breakout signals a renewed upside bias, with price action now testing the upper boundary of a multi-week range.

Momentum indicators support the current bullish phase but also highlight developing overextension. The RSI has pushed into the 70 zone, signaling peak momentum but also a potential exhaustion risk if price stalls at resistance. Meanwhile, the MACD remains firmly positive with expanding histogram bars, confirming rising bullish pressure and a continuation-valid signal as long as the MACD line holds above zero.

Overall, DXY is positioned in a bullish continuation phase, but the current level represents a pivotal inflection point: a breakout confirms trend extension, while a failed test may trigger short-term profit-taking.

Resistance Levels: 100.25, 101.10
Support Levels: 99.50, 98.80

GOLD, H4

Gold (XAU/USD) remains under corrective pressure after failing to sustain the breakout above the $4,365–$4,400 resistance zone, forming a clear double-top rejection that has shifted the near-term structure into a bearish retracement phase. The loss of momentum following the peak and the subsequent breakdown below the 50-period moving average have reinforced a short-term downside bias.

Momentum indicators reflect the weakening landscape. The RSI remains capped below the mid-50s zone, signaling lack of bullish recovery momentum, while the MACD continues to hover below the zero line despite a modest recent uptick indicating that the broader downside phase remains intact unless momentum meaningfully turns positive.

Overall, gold is trading in a corrective pullback environment, with the $3,990–$4,035 zone acting as the key pivot. A breakdown confirms further selling flow, while a recovery above $4,035 would be needed to shift bias back toward bullish continuation.

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