DBG Markets: Market Report for Sep 09, 2025

Equities Edge Higher, Gold at Record: Fed Cuts and Inflation in Focus

U.S. equities edged higher on Monday, supported by rising expectations of Federal Reserve rate cuts. Markets are now pricing in three cuts in 2025, lifting overall risk sentiment and pushing global equities higher. Japans Nikkei 225 also extended gains, marking another record high.

However, the advance remains measured as investors turn cautious ahead of this week‘s key U.S. inflation data—Wednesday’s PPI and Thursdays CPI—which will be pivotal in shaping Fed policy expectations.

Fed Expectations Drive the Rally

Rate-cut expectations remain the primary driver of sentiment. Traders are fully pricing in a 25 basis point cut at the Feds September meeting next week. According to the CME FedWatch Tool, markets see an 88.4% probability of a cut in September, with three cuts anticipated through 2025.

Still, optimism should be tempered. Historically, markets tend to reprice quickly once cuts are delivered, which could limit sustained upside for U.S. equities. The durability of this rally may ultimately hinge on incoming inflation data and the Feds policy guidance.

US500 (S&P 500), 4-Hour Chart

From a technical perspective, the recent rally in the US500 has formed a rising wedge pattern, often a signal of slowing momentum even within an uptrend. This reflects the markets cautious optimism.

While the broader trend remains bullish, a decisive break below the wedge could trigger a deeper corrective move or profit-taking.

Such a move would likely coincide with a recalibration of Fed expectations, potentially following this week‘s inflation data or the Fed’s rate decision next week.

Gold Breaks Record, Holds Above $3,600

Gold extended its rally on Monday, decisively breaking above the $3,600 level to set a fresh record high. The move carried into Tuesdays Asian session, where the precious metal continued to consolidate above this key threshold. The breakout underscores strong bullish momentum, with the short-term bias still tilted higher.

The surge in gold has been supported by several key factors:

· Fed rate cut expectations – Lower interest rate prospects reduce the opportunity cost of holding non-yielding assets like gold.

· Bond market volatility – Elevated global bond yields and ongoing fiscal concerns have increased safe-haven demand.

· Weaker U.S. data – Recent signs of a cooling U.S. labor market have reinforced the case for policy easing, further underpinning gold.

XAU/USD, 4-hour chart

XAU/USD, M-15 chart

From a technical standpoint, the breakout above $3,600 confirms the continuation of the broader uptrend, with this level now likely to serve as a strong psychological support as long as sentiment does not shift significantly.

On the intraday outlook, the short-term uptrend remains intact until a clear reversal pattern emerges, which could signal the potential for a deeper pullback on the broader timeframe. For now, momentum continues to favor the upside.

Traders should, however, stay alert to near-term risks. The sharp rally may invite profit-taking if upcoming U.S. inflation data or Fed communications shift market expectations on rate cuts. Unless a clear reversal develops, gold is likely to remain well-supported.

Market Outlook

Looking ahead, investors will closely monitor this week‘s U.S. inflation data, a key driver for expectations around the Fed’s September policy meeting. Softer inflation readings would reinforce rate-cut bets, supporting equities and gold, while stronger figures could revive concerns over prolonged tightening or a more hawkish stance, weighing on risk assets.

For gold, structural support remains intact, though a pullback is possible if sentiment shifts.