DBG Markets: Market Report for May 21, 2025

MARKET ANALYSIS

GOLDGold has broken out of consolidation with a clear bullish breakout occurring before the close of yesterdays trading session. Both the MACD and RSI are now showing strong bullish signals, supporting the upward momentum.

This breakout is driven by several fundamental factors weakening the dollar:

Renewed tariff concerns aimed at countries not negotiating with the U.S. ""in good faith""

A downgrade of the U.S. credit rating by Moodys

The Feds wait-and-see approach to rate cuts

Rising geopolitical concerns, particularly in the Middle East

Trumps withdrawal from mediating the Russia-Ukraine conflict

An upcoming vote on Trumps significant tax reform package

All these factors are weighing on the dollar, making gold more attractive to international buyers. With the technical and fundamental landscape aligned, we now anticipate further upside in gold prices, with potential to test or surpass historical highs—contingent on how these fundamentals evolve in the coming days."

SILVERSilver prices remain below historical norms, even as gold rallies. However, there are signs of growing strength, with the MACD and RSI showing increased bullish momentum and volume. In a risk-off environment, silver may benefit from a spillover effect as traders seek alternatives to the dollar. If momentum builds, we could see additional upside in the near term.

DXYThe Dollar continues its decline following a break below key support. Despite the MACD showing some consolidation, bearish volume is growing steadily, confirming a strong downward trend. The RSI is approaching oversold territory, and price action supports that reading.

Our outlook on the dollar has now shifted to firmly bearish, and we anticipate further downside unless a significant reversal or fundamental shift occurs.

GBPUSDThe Pound has broken above its previous range, suggesting a bullish continuation is underway. The MACD and RSI both confirm upward momentum, with healthy, steady growth despite volatile price movements.

However, multiple resistance levels remain overhead, so traders should remain cautious. With continued dollar weakness, we expect the Pound to extend gains, albeit with potential pullbacks near key resistance zones."

AUDUSDThe Aussie remains muted despite dollar weakness, reflecting market expectations of another rate cut by the RBA.

According to analysts, the RBA's recent press conference signaled a pivot from hawkish to dovish, with talk of potentially cutting rates by 50bps. Goldman Sachs now forecasts:

25bp cuts in July and August

A final cut in November, reaching a terminal rate of 3.1%

Markets now price in a >50% chance of a rate cut at the July 8 meeting, up from <20% a week ago.

Technically, the Aussie remains range-bound, and we await a clear structural break before taking a stance."

NZDUSDThe Kiwi has previously broken higher but failed to sustain strong upside. However, technical indicators remain bullish, with the MACD and RSI showing consistent volume and momentum.

Markets are also expecting a rate cut from the RBNZ, contributing to some underlying weakness. Yet, it remains more resilient than the AUD, suggesting a potential bullish continuation if structural resistance is cleared.

Westpac now forecasts a 25bp cut with potential for further easing, with year-end rates seen closer to 2.83%, down from 3.0% earlier this week.

EURUSDThe Euro has gained significantly and now shows a clear bullish bias. The MACD and RSI support this, although the RSI is nearing overbought territory—suggesting a possible short-term pullback.

Nevertheless, overall momentum has shifted bullish, and we expect continued gains as long as price action holds above recent support.

USDJPYThe Yen continues to gain on the dollar, confirming a bearish trend for USD/JPY. The MACD shows strong bearish volume, while the RSI is hinting at a potential short-term correction before further downside resumes.

We remain bearish on this pair, expecting further Yen strength unless sentiment or fundamentals shift significantly.

USDCHFThe Franc is gaining sharply against the dollar, with price action showing an aggressive move lower in USD/CHF. Both the MACD and RSI are aligned with this bearish trend, confirming rising momentum.

We anticipate continued downside and will look for additional bearish opportunities in the sessions ahead."

USDCADThe CAD is also strengthening, with the MACD and RSI showing increased bearish volume and momentum against the dollar.

With the broader structure favoring the bears, we expect further downside in USD/CAD and will continue to look for sell-side opportunities as long as the structure holds.