DBG Markets: Market Report for Oct 21, 2025

Global Risk Appetite Rebounds, But Policy & Trade Risks Still Linger

Global equities posted broad gains on Monday as trade relief expectations, Fed rate-cut bets, and strong tech earnings lifted overall market sentiment.

In the U.S., the S&P 500 rose 1.07%, the Nasdaq gained 1.37%, and the Dow Jones advanced 1.12%. European and Asian markets also extended their rallies, with the Euro Stoxx and Nikkei hitting fresh record highs. Meanwhile, cryptocurrencies rallied alongside, led by Bitcoin, further underscoring the rebound in risk appetite.

Policy and Trade Risks Still Linger

Despite the short-term optimism, trade tensions remain a major overhang. U.S. President Donald Trump escalated his stance, warning of 155% tariffs on Chinese goods if upcoming negotiations fail.

Meanwhile, the U.S. and Australia signed an $8.5 billion rare earth and critical minerals cooperation agreement aimed at reducing reliance on Chinese supply chains. These developments may provoke retaliatory measures from China and add to geopolitical uncertainty, leaving markets vulnerable to sudden headline-driven volatility.

U.S. Dollar: Supported but Capped

The U.S. dollar saw a modest bounce on Monday, with the U.S. Dollar Index extending its two-day rebound after finding strong support near the 98.00 level. This rebound has kept the short-term structure tilted toward the bullish side, supported by the existing uptrend channel.

USD Index, H4 Chart

However, over the broader trend, the dollar remains in a consolidation phase.

· A decisive break above 98.50 could reinforce the bullish structure and open the door for further upside.

· Failure to regain that level would suggest the dollar may continue to trade in a broader range or come under renewed pressure.

Still, dovish Fed rhetoric and trade uncertainty remain key macro drivers, potentially capping the dollars rally even as short-term support holds firm.

Gold Technical Outlook: $4,380 Resistance Becomes Key

Gold is encountering notable selling pressure near $4,380/oz, signaling a heavy resistance zone after the recent rally. While underlying buying interest remains strong after the rebound on yesterday, the price action suggests the possibility of short-term consolidation or a technical pullback.

XAU/USD, H1 Chart

Technically, a failure to reclaim $4,350 - $4,380 may keep gold trading in a sideways range or trigger a mild technical correction.

· Immediate support is now seen in the $4,300–$4,275 area, which has acted as a reliable floor during previous dips.

· Further below, the $4,220–$4,200 band remains a structural support zone, anchoring the broader uptrend.

XAU/USD, H4 Chart

For now, the bullish structure remains intact, and a decisive break above $4,380 would likely reignite upside momentum. However, recent price action suggests that bullish momentum may be losing some steam, indicating that the rally could be entering a more cautious phase.

In simple terms, gold remains in an uptrend, but buyers should be alert to potential signs of exhaustion at current levels.

Gold Scenarios to Watch:

· Bullish Case: A sustained break above $4,380 would reinforce the uptrend, targeting $4,400 and beyond, especially if dovish Fed expectations deepen or geopolitical risk flares up.

· Neutral/Consolidation Case: Failure to break higher could keep gold trapped between $4,380 and $4,275 as traders consolidate gains.

· Bearish Case: A stronger dollar or a meaningful trade de-escalation could trigger deeper profit-taking toward $4,220–$4,200, but the broader uptrend remains intact as long as this zone holds.

Bottom Line

Global markets are enjoying a short-term relief rally, fueled by trade optimism, Fed rate-cut expectations, and stronger risk sentiment. However, underlying trade and policy risks remain firmly in place, keeping the rally fragile and headline-driven.

The U.S. dollar is finding support near key levels but faces upside limitations amid persistent dovish Fed expectations. Meanwhile, gold remains the standout asset, holding a firm bullish structure but showing early signs of momentum fatigue near $4,380 — a critical resistance zone to watch.

Going forward, headline risk from U.S.–China trade developments, Fed communications, and shifts in risk appetite will remain the key drivers. Traders should stay nimble, as gold‘s upside, dollar’s range, and equity sentiment are all closely tied to evolving macro signals.