US stocks stage a remarkable bullish reversal, driven by Fed Chair Powell’s dovish comments. The US dollar weakens, fueling Gold’s surge to a new all-time high.
Dovish Fed Chair triggered a bullish reversal in equities, Gold skyrocketed to another record high
Key takeaways
- Fed’s dovish shift boosts markets: Fed Chair Powell signalled a potential halt to balance sheet reduction and hinted at future rate cuts amid a weakening labour market, lifting investor sentiment.
- Financials lead gains: Strong Q3 earnings from Goldman Sachs, Citigroup, Wells Fargo, and BlackRock supported market resilience, with the Dow Jones and Russell 2000 outperforming.
- US dollar weakens, Gold surges: A softer USD and dovish Fed outlook drove Gold (XAU/USD) to a new all-time high of US$4,210.
The major US stock indices managed to stage a remarkable intraday bullish reversal on Tuesday, 14 October, supported by a dovish speech made by US Federal Reserve Chair Powell, where he signalled that the Fed may stop shrinking its balance sheet in the coming months to preserve liquidity in the overnight funding markets.
In addition, Powell also highlighted sluggish US labour market conditions that increased Fed funds rate cuts for 2026. Based on the latest data from the CME FedWatch tool, Fed funds rate futures traders have started to price in a high chance of 91% that the Fed funds rate may be lowered by 2.75%-3.00% by the end of 2025 from the current level of 4.00%-4.25%.
Stronger-than-expected Q3 earnings from major US financial institutions, including Goldman Sachs, Citigroup, Wells Fargo, and BlackRock, lifted overall market sentiment on Tuesday. The Dow Jones Industrial Average, which carries heavier exposure to financials, outperformed with a 0.4% gain, while the tech-heavy Nasdaq 100 (-0.7%) and S&P 500 (-0.2%) lagged. The small-cap Russell 2000 led gains, rallying 1.4% on growing expectations of a more dovish Federal Reserve stance.
The US dollar also weakened, as the US Dollar Index shed 0.2%. In today’s Asia session, the greenback extended its loss, recording an intraday drop of 0.2%, which eased the gains made in prior sessions since last Thursday, 9 October. The AUD and JPY lead among the major currencies with intraday rallies of 0.5% and 0.4% respectively, against the US dollar at the time of writing.
A weaker US dollar, coupled with the dovish Fed Chair’s speech, reinforced the bullish tone in Gold (XAU/USD). In today’s Asia session, the precious yellow metal extended its rally for the fourth consecutive session as it rallied by 1.6% to reach another fresh intraday all-time high of US$4,210.
Our YouTube video above contains the latest intraday technical analysis on the US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
