Will the Dollar’s Drop Fuel More Gold Upside After Weak PCE DXY OUTLOOK – Will the Dollar’s Drop Fuel More Gold Upside After Weak PCE and Trade Tensions?
📉 TECHNICAL STRUCTURE – DXY CONTINUES TO WEAKEN
The US Dollar Index (DXY) has failed to hold the 99.20–99.30 support zone and continues to respect its bearish structure on the H2 chart. The sharp sell-off at the end of May was a direct response to weaker-than-expected PCE inflation data, combined with growing political uncertainty surrounding US–China and US–EU trade negotiations.
🔻 Key Resistance Levels: 99.234 – 99.618
🔻 Key Support Zone: 98.030 – A clean break below this may open the door toward 97.50
🌍 MACRO CONTEXT – USD UNDER PRESSURE ON MULTIPLE FRONTS
Trump’s tariff decisions remain unclear. While some deadlines were delayed (e.g., steel tariffs on the EU), no substantial agreements have been reached.
Core PCE inflation – the Fed’s preferred gauge – continues to ease, reducing expectations of further rate hikes in the short term.
Institutional flows are shifting toward safe havens like gold, especially as uncertainty clouds the outlook for both US fiscal and trade policy.
📊 IMPACT ON XAUUSD – DOLLAR DROP GIVES GOLD ROOM TO RALLY
Gold remains supported by:
A weakening DXY trend
A bullish structure on H1 with EMA 13–34–89–200 alignment in favor of upside
Strong safe-haven demand heading into a new month with fresh capital inflows
If DXY breaks below 98.70 and slides toward 98.030, gold could extend its rally toward key resistance zones at 3348 – 3361.
🎯 TRADING STRATEGY (Based on DXY Bearish Continuation):
Prioritize buy setups on XAUUSD if DXY fails to reclaim the 99.23 resistance
Watch for a potential DXY pullback to resistance – if rejected, this would confirm momentum for gold to climb further
📌 NOTE: Traders should stay alert to any major news from the Fed or new developments in US–China–EU trade talks. While the current DXY structure favors continued downside, short-term pullbacks can provide gold with consolidation before another leg higher.
