# Fed turns from hawkish to dovish, dollar gains are hindered, precious metals strengthen against the trend

The US Dollar Index (DXY) rose slightly by 0.06% today, mainly supported by the weakness of the yen, but the upward momentum was constrained by several factors:

**Fed policy shift draws attention**
Federal Reserve official Waller made a statement yesterday advocating for a 25bp rate cut in December, which directly cooled the dollar's enthusiasm. The market currently prices a 70% probability of a rate cut at the December FOMC meeting (December 9-10). Once a rate cut is set in stone, it will be difficult for the dollar to continue its strength.

**The euro rebounds slightly, but lacks momentum**
EUR/USD rose 0.08%. NATO Secretary General Stoltenberg expressed confidence in the achievement of a peace agreement for Ukraine, stating that Russia is "in a bind" (losing 20,000 troops monthly), which provided some support for the euro. However, Germany's IFO business confidence unexpectedly fell to 88.1 in November (below the expected 88.5), limiting the rebound potential. The market pricing for an ECB rate cut on December 18 is only 2%.

**Yen under heavy pressure, precious metals take the opportunity to rebound**
USD/JPY surged 0.38%, with the yen struggling to hold its ground under the pressure of the Japanese government's 17.7 trillion yen stimulus plan (surpassing last year's 13.9 trillion). It just reached near last Friday's 10-month high. The market pricing for a BOJ rate hike on December 19 is only 23%.

In terms of precious metals, gold/silver rebounded after a decline in the morning session—December COMEX gold rose by 0.21%, and silver increased by 0.19%. Waller's dovish remarks activated safe-haven buying, along with ongoing bottom-fishing by global central banks (China's central bank increased its gold reserves to 74.09 million ounces in October, marking 12 consecutive months of accumulation; global central banks bought 220 tons of gold in Q3, a 28% increase month-on-month), providing support for precious metals.

**Key Points**: The keyword for this market trend is "policy reversal" - a shift from tightening expectations to easing, leading to a decline in the dollar's favor and a resurgence in precious metals and weaker currencies. The market's game before the December policy meeting has only just begun.