Gold Holds Near Highs Despite USD Strength

Key Takeaways:

*The U.S. dollar has rebounded in recent sessions, supported by resilient Treasury yields and safe-haven flows, even as markets continue to weigh potential Fed rate cuts later this year.

*Gold remains firm despite short-term USD strength, underpinned by low real yields, inflation hedging, and increased local demand in Japan.

*The Trump-Xi call, covering TikTok ownership and trade discussions, temporarily boosted risk sentiment, creating a mixed backdrop for the dollar and safe-haven assets.

Market Summary:

The U.S. Dollar Index (DXY) has edged higher over the past few days, supported by resilient Treasury yields and renewed safe-haven demand amid mixed global economic signals. While markets continue to price in potential future Fed rate cuts, short-term positioning has favored the greenback as investors recalibrate expectations for U.S. monetary policy versus other major economies. The recent uptick in the dollar comes after a period of weakness, reflecting a temporary flight-to-quality as geopolitical and policy risks remain in focus.

Gold has shown resilience despite the recent dollar rebound, holding near multi-week highs as investors hedge against inflation and ongoing global uncertainty. The metal continues to benefit from real yield compression, and in Japan, yen depreciation has further boosted local demand, lifting gold prices to record highs in yen terms. Gold’s dual role as both a store of value and a safe-haven asset keeps it in demand even when short-term USD strength emerges.

The recent call between U.S. President Donald Trump and Chinese President Xi Jinping has added another dimension to market sentiment. The leaders reportedly reached a framework agreement on TikTok ownership and discussed trade and technology policies, with both confirming plans for future meetings at the APEC Summit and early 2026 visits. While the discussions offered a temporary boost to risk appetite, market participants remain cautious, as the details of trade and technology arrangements could still influence the dollar’s medium-term trajectory. Consequently, the near-term direction of both the dollar and gold will be sensitive to upcoming U.S. inflation data, Fed policy signals, and evolving geopolitical developments, including U.S.–China relations.

Looking ahead, the dollar’s medium-term direction will hinge on upcoming U.S. inflation data, the Fed’s forward guidance, and evolving geopolitical developments. For gold, sustained demand will likely depend on the interplay between USD trends, safe-haven flows, and inflation hedging needs, while short-term fluctuations may mirror temporary dollar strength or shifts in risk appetite.

Technical Analysis

DXY, H4

The U.S. Dollar Index (DXY) is attempting a rebound, with price recovering above the 97.55 level and now testing the 98.10 resistance zone. Buyers have stepped in strongly from the 97.00 floor, marking it as a key short-term base. A sustained close above 98.10 would strengthen bullish momentum and open the way toward 98.75 and 99.60, while rejection here risks dragging price back toward 97.55.

Momentum indicators support the ongoing recovery. The RSI has climbed to 65, showing renewed bullish strength without yet reaching overbought territory. Meanwhile, the MACD has crossed above the signal line, reinforcing the short-term bullish bias.

Overall, DXY is staging a recovery rally but still faces a pivotal test at 98.10. A breakout would confirm bullish continuation, while failure to clear resistance could trap the index back into range-bound trade.

Resistance levels:98.10, 98.75
Support levels: 97.55, 97.00

XAUUSD, H4

Gold is currently trading near $3,689, pressing against the key $3,685–$3,700 resistance zone, which aligns with the recent Fibonacci extension level. Price remains supported above the 20- and 50-period moving averages, keeping the short-term trend constructive. A decisive breakout above $3,700 could open the way toward $3,828 (1.272 Fib extension), while failure to clear this zone risks a pullback toward $3,616.

Momentum signals remain mixed. The RSI is at 62, recovering from mid-levels but still capped by a bearish divergence from earlier highs, hinting at waning momentum. The MACD has crossed back into positive territory, though it too confirms bearish divergence, suggesting limited upside without fresh catalysts.

Overall, Gold is consolidating at a critical resistance. Bulls need a clean break above $3,700 to resume the broader uptrend, while bears will look for rejection here to trigger a retracement toward$3,616.

Resistance levels:3700.00, 3800.00
Support levels: 3616.00, 3570.00