Fundamental & Geopolitical
found support after the U.S. June CPI came in weaker than expected, marking the first monthly decline in inflation in six years. The data reduced expectations of a July Federal Reserve rate hike, putting short-term pressure on the U.S. Dollar and supporting gold prices.
However, the upside remains limited as Fed Chair Kevin Warsh reiterated that returning inflation to the 2% target remains the central bank’s top priority, leaving the door open for additional rate hikes if inflation accelerates again.
Meanwhile, geopolitical tensions in the Middle East continue to support safe-haven demand. Although President Donald Trump withdrew the proposed 20% transit fee for ships passing through the Strait of Hormuz, the U.S. continues its military operations against Iran, keeping oil prices elevated. Higher energy prices could reignite inflation pressures, while investors are now focused on the upcoming U.S. PPI data for further clues on the inflation outlook.
Technical Analysis: DXY Daily
On the Daily timeframe, the remains in a confirmed uptrend, supported by a clear higher high–higher low market structure. Additional confirmation comes from price holding above both the 50-day SMA and 200-day SMA, indicating that the medium-term bullish trend remains intact.
Price is currently retesting a resistance-turned-support zone. As long as this area holds, the probability of a bullish rebound remains high, with the next upside target located at the May high of 101.965.
4H
On the 4-hour timeframe, the bullish market structure also remains intact, with price continuing to form higher highs and higher lows. The index is trading above the 200 SMA, which acts as dynamic support, while also respecting an ascending trendline.
The confluence of horizontal support, trendline support, and the 200 SMA increases the probability of a bullish continuation. As long as this support zone remains intact, DXY is likely to continue its recovery toward the 101.965resistance level.
Gold Daily
On the Daily timeframe, gold continues to trade below both the 50 SMA and 200 SMA, confirming that the broader trend remains bearish. Recent price action suggests that selling pressure continues to dominate, with bullish moves still appearing corrective rather than trend-reversing.
The US$4,030 area remains a key support level. A confirmed break below this level could open the door for further downside toward US$3,886, followed by US$3,838 and US$3,770.
Gold 4H
On the 4-hour timeframe, the bearish outlook remains unchanged. Price continues to trade below both the 50 SMA and 200 SMA, aligning with the bearish trend seen on the Daily chart.
Market structure continues to form lower highs and lower lows, indicating that sellers remain in control. The previous rally into the premium zone was merely a technical rebound, creating another lower high rather than signaling a trend reversal.
As long as the price remains below the US$4,194 resistance level, the probability of forming a new lower low remains high.
Conclusion
Despite softer U.S. inflation providing short-term support for gold, the overall outlook remains mixed due to the Federal Reserve’s hawkish stance, persistent geopolitical risks, and elevated oil prices that could revive inflation pressures.
From a technical perspective, the U.S. Dollar Index remains bullish on both the Daily and 4-hour timeframes, while gold continues to maintain a bearish market structure. Unless gold breaks above US$4,194, the downside bias remains intact, with US$3,886 serving as the next major support level.
The upcoming US Producer Price Index (PPI) will likely be the next key catalyst for both the U.S. Dollar and gold.
Disclaimer: This analysis is for educational and informational purposes only and should not be considered financial or investment advice. Financial markets involve substantial risk, and all trading or investment decisions are the sole responsibility of the individual. Always conduct your own analysis and apply proper risk management before entering any trade.
