Gold Shines, Stocks Stagnate as Trade Risks Rise and Fed Softens

Daily Market Insights – October 10, 2025, Brought to you by Ultima Markets

Fed Policy & U.S.–China Trade Tensions as Key Drivers

The global financial narrative today is being shaped by two dominant forces: escalating U.S.–China trade tensions and a highly dovish outlook from the Federal Reserve. These developments are setting the tone across asset classes, driving both risk aversion and policy-driven market positioning.

Macro Focus: U.S.–China Trade Escalation Deepens

U.S.–China trade tensions intensified further as both sides began imposing reciprocal port fees on shipping firms — with Beijing specifically targeting U.S.-flagged vessels. This marks another escalation front, despite President Trump’s recent comments that “all will be good,” which offered little reassurance to markets.

The latest escalation also includes export controls on rare earths and critical minerals by China, prompting sharp criticism from U.S. Treasury Secretary Scott Bessent, who accused Beijing of trying to “pull everybody else down.”

The risk of further retaliation is rising. Global risk assets may remain under pressure, particularly if trade measures begin affecting supply chains, critical minerals, and industrial activity, all of which could slow growth momentum.

Federal Reserve: Dovish Tilt Amid Labor Market Weakness

Another major macro driver came from Fed Chair Jerome Powell’s remarks on October 14. Powell warned that the sharp slowdown in U.S. hiring poses increasing risks to the economy. He noted that rising downside risks to employment have shifted the Fed’s policy assessment, signaling that the central bank is likely to cut rates at least twice more before year-end.

This reinforces the market view of a more dovish Fed stance, especially in the face of ongoing U.S. government shutdown delays in official data releases, which further cloud the economic outlook.

Markets are now reacting to this dual narrative—on one hand, escalating trade tensions, and on the other, a softer U.S. monetary policy outlook.

Market Impact Overview

• Gold: Safe-haven demand is surging on trade war fears, while a dovish Fed and lower interest rates make non-yielding gold even more attractive to investors.
• U.S. Dollar: The greenback remains supported by defensive flows but could face pressure if rate-cut expectations deepen.
• U.S. Equities: Tech and growth stocks came under renewed pressure from trade war fears. If tensions escalate, U.S. and global equity markets could face more sustained headwinds.

US Dollar: Mixed Forces at Play

The U.S. dollar is currently caught between defensive flows — stemming from trade, monetary policy, and political uncertainty — and the risk of renewed weakness if the macro-outlook deteriorates further.

USDX, Daily Chart | Source: Ultima Market MT5

From a technical perspective, the U.S. Dollar Index failed to sustain a breakout above the 99.00 level but remains supported above the key 98.50 zone. This area is crucial for maintaining the recent bullish reversal structure.

• A sustained hold above 98.50 could keep the dollar supported in the near term.
• A decisive break below this level, however, would expose the dollar to further downside pressure, potentially extending the recent pullback and reviving the broader downtrend bias.

U.S. Stocks: Trade Tensions Cap Gains

U.S. equities opened the week with a mixed tone as dovish signals from the Federal Reserve helped stabilize sentiment, but lingering U.S.–China trade tensions continued to cap upside momentum.

Investors remain focused on the potential impact of the 100% U.S. tariffs on Chinese goods, scheduled to take effect on November 1, and whether upcoming diplomatic talks can help ease market pressure and restore confidence.

S&P 500, Daily Chart | Source: Ultima Market MT5

From a technical perspective, the S&P 500 is consolidating following last week’s pullback.

• Key level to watch: 6,700 — sustained pressure below this zone may trigger a broader risk-off move, potentially leading to a deeper correction.
• On the upside, a clear break above the recent highs would be needed to reestablish bullish momentum.

With Fed policy expected to turn more accommodative but trade risks rising, U.S. equities are likely to remain range-bound in the near term, with headline-driven volatility dictating day-to-day sentiment. Any escalation in trade tensions could quickly shift flows toward defensive positioning.

Gold: Safe-Haven Rally Continues

Gold pushed to new highs once again, fueled by U.S.–China trade tensions, geopolitical uncertainty, and sustained safe-haven demand.

The $4,100 level remains a critical pivot point (as noted in yesterday’s insights). Holding above this zone continues to reinforce the bullish narrative and keeps upward momentum intact.

XAU/USD, H1 Chart | Source: Ultima Market MT5

From a technical perspective:

• Immediate resistance sits at $4,180–$4,200, a key psychological zone that could challenge bullish momentum.
• Near-term support remains anchored at $4,100. A firm defense of this level would likely encourage more dip-buying behavior.
• A break above $4,200 could open the door for an extension of the rally, while any failure near resistance could trigger a corrective pullback.

While the macro backdrop favors gold bulls, traders should remain tactically cautious, especially as price approaches major resistance zones where volatility can spike.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.