DBG Markets: Market Report for Oct 07, 2025

Gold Holds Firm Above $3,900; Dollar Recovery Remains a Wild Card

Macro Outlook & Risk Landscape

Global growth remains under strain as markets grapple with heightened policy and political uncertainty. With the U.S. government still in partial shutdown and key data — especially the Non-Farm Payrolls (NFP) report — delayed, investors are left navigating without their usual economic guideposts. This lack of visibility has amplified short-term volatility and dampened confidence across major markets.

At the same time, political shifts are adding to uncertainty. In Japan, attention turns to the mid-October parliamentary vote following Sanae Takaichi‘s rise as leader of the ruling Liberal Democratic Party (LDP) — a historic moment that could make her Japan’s first female prime minister. Known for her conservative stance and support for fiscal expansion, her leadership may influence both government policy and the Bank of Japans cautious normalization path.

In Europe, political fragility in France — the eurozones second-largest economy — is also under scrutiny, underscoring how multiple regions are facing fiscal and policy crosscurrents. Together, the U.S. data blackout and global political realignments have left markets hypersensitive to every economic release and central bank signal, keeping volatility and uncertainty elevated.

Gold: Uncertainty Keeps the Rally Alive

Gold continues to benefit from the current wave of global uncertainty, extending its record-setting rally as investors seek safety amid the U.S. government shutdown and delays in key economic data. With visibility on growth and policy now clouded, safe-haven demand remains a dominant theme, keeping gold well supported above the $3,900 mark.

XAU/USD, H1 Chart

Technically, momentum still favors the upside as long as prices hold above the $3,895–$3,900 zone. The $3,950 level — which was broken and retested yesterday — now serves as immediate support.

XAU/USD, M15 Chart

With that, gold could next target the key psychological level of $4,000, which may become a crucial test under the current market landscape. However, the lack of a meaningful corrective pullback suggests the rally is becoming stretched, particularly as gold approaches this major resistance.

While the broader bias remains bullish, traders should remain alert for signs of consolidation or short-term exhaustion — especially if risk sentiment improves or the U.S. dollar attempts a recovery.

U.S. Dollar: Rebound Effort Faces Uncertainty

The U.S. Dollar remains under pressure as macro uncertainty and the ongoing government shutdown continue to cloud investor sentiment.

Still, after several session of decline, the dollar attempted a mild rebound and the US Dollar Index remained above the 97.50 support—a level that has proven pivotal over the past two weeks.

USD Index, H4 Chart

Technically, holding above this key support could still allow the dollar another leg higher, particularly amid limited data visibility and a temporary cooling of policy and labor market concerns.

A move toward 98.50 remains possible; however, until clarity emerges on fiscal negotiations and the timeline for delayed economic releases, the dollars rebound is likely to stay shallow — driven more by short-term positioning than a meaningful shift in trend.

USD/CNH: Yuan Stabilizes, Signs of Reversal Emerging

The USD/CNH pair is showing early signs of recovery after weeks of steady dollar strength. The U.S. dollar has found some footing, while the Chinese yuan continues to receive liquidity support from the PBOC, helping to stabilize the recent over-appreciation against the dollar.

USDCNH, H4 Chart

Technically, USD/CNH is holding near the 7.1000 support boundary, where a potential inverted head-and-shoulders pattern appears to be forming. This suggests that the pair may have found a short-term base around 7.1000, potentially setting up for a near-term rebound — though uncertainty remains high.

For now, the reversal still lacks a strong macro catalyst, as the next move will likely depend on upcoming U.S. data. That said, the technical setup continues to support a constructive near-term outlook. A breakout above 7.1450 could open the way for further upside, while holding above the 7.1150–7.1000 support zone keeps the broader bias tilted toward a bullish reversal — largely contingent on the dollars direction.