Will DXY Hold 105.615? Powell’s Remarks and Gold Rally Could Drive Volatility

U.S. Dollar Eases as Treasury Yields Rise; Gold Gains on Safe-Haven Demand

The U.S. Dollar Index (DXY) dipped on Wednesday as rising Treasury yields and weaker-than-expected U.S. labor data kept traders cautious ahead of a pivotal Federal Reserve speech. Meanwhile, gold prices edged higher, supported by safe-haven demand amid geopolitical tensions and market uncertainty.

At 15:48 GMT, the U.S. Dollar Index is trading 106.255, down 0.086 or -0.08%.

Treasury Yields Resilient Despite Weak ADP Report

The yield on the 10-year Treasury climbed 2 basis points to 4.242%, while the 2-year yield remained stable at 4.173%. This movement followed an underwhelming ADP employment report, which showed private payrolls increased by 146,000 in November, falling short of the 163,000 forecast. The labor market’s performance is now under greater scrutiny ahead of Friday’s nonfarm payrolls data, projected to reveal a 214,000-job increase and a slight uptick in unemployment to 4.2%.

Gold Gains Amid Political Turmoil

Spot gold rose 0.3% to $2,650.37 per ounce, while U.S. gold futures traded slightly higher at $2,674.10. The dollar’s partial recovery added pressure to gold prices, as a stronger greenback raises the cost of dollar-denominated bullion for international buyers. However, safe-haven bids bolstered gold amid escalating political turmoil in South Korea and France.

South Korean President Yoon Suk Yeol faced calls for resignation after a controversial declaration and reversal of martial law, while France’s government is at risk of collapse due to no-confidence motions against Prime Minister Michel Barnier. Exinity Group Chief Market Analyst Han Tan noted that “gold prices have been weighed down by the stronger dollar narrative, though still supported by safe-haven bids in light of political instability.”

Traders are also eyeing the Fed’s policy direction, with CME Group’s FedWatch Tool indicating a 74% probability of a 25-basis-point rate cut at the December 18 meeting. Lower interest rates generally enhance the appeal of non-yielding assets like gold.

Powell’s Speech and Key Data on Deck

Federal Reserve Chair Jerome Powell will address the New York Times DealBook Summit today, with markets anticipating further clarity on monetary policy. The Fed has leaned dovish in recent months, implementing two rate cuts to mitigate economic risks, but Powell’s comments could reshape market expectations. Friday’s jobs report and next week’s CPI data will also play critical roles in shaping sentiment.

Market Forecast

The DXY may remain range-bound near its current pivot at 105.615, with resistance at 106.843 and support at 105.722. A dovish Powell or disappointing jobs report could pressure the dollar, supporting gold prices within the $2,600–$2,700 range. Conversely, stronger jobs data or inflation vigilance from Powell may boost the dollar while weighing on gold. Traders should prepare for heightened volatility as these key events unfold.