DBG Markets: Market Report for Oct 10, 2025

Dollar Extends Gains, Gold Retreats Below $4,000 as Risk Premium Fades

Fed Signals Mixed Tone, Dollar Strengthens

The U.S. dollar is on a four-session winning streak, buoyed by cautious messaging from Federal Reserve officials. The latest remarks highlight a growing policy divide within the Fed, which is tempering expectations for aggressive easing into 2025.

· Fed Governor Michael Barr urged caution, warning that inflation risks remain elevated and that the Fed must avoid overreacting with excessive rate cuts.

· New York Fed President John Williams expressed support for further cuts later this year due to labor market weakness but maintained a data-dependent approach.

The September rate cut was framed as a "risk management" move. While this leaves room for more easing, it reinforces a meeting-by-meeting strategy. The latest FOMC minutes show that most officials still lean toward further cuts this year, but this policy divergence has created a more cautious easing path.

Dollar Outlook: Bullish Momentum Builds

The pushback against an aggressive Fed easing outlook has sent the U.S. Dollar Index (DXY) soaring. The DXY has decisively broken above the key 97.5–98.5 resistance zone and reclaimed the 99.00 level, signaling that a bullish reversal is gaining traction.

This is especially notable amid the current lack of economic data due to the U.S. shutdown.

USD Index, Daily Chart

Technically, If the dollar holds above this breakout zone, upside momentum could target the 100.00 mark.

The next major catalyst will likely be the upcoming Consumer Price Index (CPI) report, as the U.S. Bureau of Labor Statistics confirmed staff have been recalled to prepare its release despite the ongoing shutdown.

Gold Pulls Back Below $4,000

Gold staged a sharp pullback yesterday after retesting its record high of $4,059. The metal retreated significantly before the U.S. close as the dollar strengthened and war-linked risk premiums eased.

The decisive loss of the psychological $4,000 level signals short-term exhaustion and increases the risk of a deeper price correction, indicating a classic profit-taking scenario after a sustained rally.

XAU/USD, Daily Chart

On the daily chart, a bearish engulfing candlestick has formed. This is a strong two-candle reversal pattern, indicating that sellers have overcome buyers and suggesting a potential buildup of bearish momentum following the recent prolonged uptrend.

XAU/USD, H1 Chart

On the short-term, 1-hour chart, a double-top pattern has developed, with the $4,000 level acting as the neckline. A sustained break and hold below this neckline would confirm growing selling pressure and the technical pattern's bearish implications.

The $4,000 level is now the key battleground between bulls and bears. A bounce and sustained break back above this level could reignite the upside momentum, but failure to do so is likely to lead to extended consolidation or a further downside move toward key support levels like the $3,940–$3,930 region and even the $3900 if pullback extended.

Oil Risk Premium Eases on Ceasefire

Meanwhile, Oil prices softened as geopolitical tensions in Gaza eased after Israel and Hamas agreed to a phased ceasefire, reducing war-linked risk premiums in both gold and oil markets. Still, this limited development does little to change the underlying supply-demand dynamics but reinforced pressure on recent oil prices.

USOIL, daily Chart

Technically, USOIL (WTI) continues to hover near multi-year lows after a brief recent rebound. The $62 level remains a critical resistance point. Failure to reclaim this level keeps the oil's bearish bias intact.

UKOIL, Daily Chart

Similarly, Brent (UKOIL) faces pressure at the $66–$65 key level. A decisive break below this support would signal a clear bearish outlook.

A sustained break above this level is required to signal any meaningful reversal in sentiment, but the broad outlook may remain consolidated within the $70–$66 zone if the price manages to regain that range.

Bottom Line

The Feds mixed signals have strengthened the dollar, pushing the U.S. Dollar Index to fresh short-term highs. The ceasefire in Gaza eased geopolitical risk premiums, weighing on gold and oil.

Golds retreat below $4,000 signals short-term profit-taking and potential consolidation, though the broader uptrend remains intact as long as macro uncertainty persists. Oil remains under pressure, with supply–demand fundamentals overshadowing temporary geopolitical relief.

The CPI release next week is likely the next major catalyst — and could set the tone for both the dollar and gold in the sessions ahead.