Dollar Consolidates and Gold Steadies as Data Gaps and Political Risk Weigh

Key Takeaways:

• Dollar under pressure – ISM Manufacturing data shows deeper contraction in orders and employment; markets still price ~85–88% chance of a 25 bp Fed cut.

• Gold remains supported – Profit-taking near $4,270 is minor; broader bullish narrative intact due to geopolitical risk, inflation uncertainty, and dollar weakness.

Market Summary:

The U.S. dollar stabilized but remained structurally soft as markets digested a complicated macro mix of weakening U.S. data, shifting rate expectations, and rising political uncertainty dynamics that simultaneously kept gold supported near multi-week highs. Mondays disappointing ISM Manufacturing PMI, which slipped to 48.2 with both new orders and employment entrenched in contraction, reinforced concerns that U.S. growth momentum is fading. Although the prices index rose to 58.5, hinting at sticky tariff-driven cost pressures, the report did little to challenge expectations for a 25 bp Fed rate cut next week, with markets still pricing an 85–88% probability despite the modest repricing from last week.

Confidence was further shaken by the ongoing data blackout: last weeks delayed NFP and the still-pending Core PCE report have left policymakers “flying blind,” as traders increasingly describe it. Political uncertainty added another layer of pressure after President Trump hinted that Kevin Hassett, a known dove and close ally, could be next in line for Fed Chair, triggering a brief wave of dollar selling before yields stabilized. Some investors still view the dollar as the “cleanest dirty shirt” given resilience in certain pockets of the economy, but with sentiment fragile, the balance of risks remains tilted lower unless upcoming PCE or ISM Services data deliver a meaningful upside surprise.

Gold, meanwhile, eased slightly on profit-taking after touching strong resistance near $4,270, but the broader trend remains firmly constructive. The metal continues to benefit from cooling macro momentum, persistent geopolitical risks, and skepticism over the durability of U.S. inflation as all of which have underpinned safe-haven interest. The mild rebound in Treasury yields and stabilization in the dollar tempered Mondays surge, while market fatigue from repetitive narratives that Fed cuts, weak data, and U.S. political noise kept gold in a near-term consolidation band.

Still, the setup heading into mid-week looks potentially volatile: a clean break above $4,270 would put the record high at $4,381 back in play, especially if ISM Services or the delayed PCE print reinforce cooling inflation alongside labor-market softness. With the dollar pressured by political uncertainty and incomplete data, and gold supported on dips, both markets now await a condensed cluster of U.S. releases that will dictate the next decisive leg in price action.