Dollar Slides to Eight-Week Low as Fed Cuts Deepen; Gold Surges on Rate-Cut Bets

Key Takeaways:

• Dollar Index drops to eight-week low following third straight Fed rate cut.

• Jobless claims rise sharply, raising concerns over U.S. labor-market momentum.

• Kevin Hassett emerges as top Fed chair contender, reinforcing dovish expectations.

• Gold breaks triple-top resistance, hitting one-month high amid dollar weakness.

Market Summary:

The dollar extended its losses on Thursday, sliding to its weakest level in nearly two months as investors digested a mix of dovish Federal Reserve signals, soft U.S. economic data, and growing political pressure for more aggressive easing.

The Fed delivered its third consecutive quarter-point cut, while signaling a potential pause to monitor labor-market trends and inflation, which officials described as “somewhat elevated.” Nonetheless, market participants focused on the broader easing trajectory, with expectations for further cuts firmly priced in.

Adding to the dollars woes, U.S. Initial Jobless Claims rose sharply to 236,000, well above the consensus of 220,000, sparking fresh concern over the resilience of the U.S. labor market. Investors noted that the spike reinforced the case for continued Fed accommodation in 2026.

Political developments also weighed on sentiment. President Donald Trump has long advocated for faster rate reductions, and White House economic adviser Kevin Hassett, a known dovish voice, is viewed as the leading candidate to replace Jerome Powell as Fed chair. Markets interpreted Hassetts potential nomination as supportive of a more aggressive easing path.

Gold, meanwhile, capitalized on the dollars weakness, surging to a one-month high and decisively breaking a triple-top formation. The depreciation of the greenback, combined with growing expectations for Fed rate cuts, lifted demand for the dollar-denominated metal.

Looking ahead, traders are eyeing the December 16 Nonfarm Payrolls (NFP) release as a potential catalyst. A softer-than-expected jobs print could strengthen golds rally and keep the dollar under pressure, while a stronger outcome may temporarily cap gains in bullion and stabilize the greenback.