Maybe you need to wait for PostgreSQL service to be up and running.

Can you add a 10 seconds delay before trying the psql stuff? Something like:

 - sleep 10

If it works, then you can use a more specific solution to wait for PostgreSQL to be initialized, like Docker wait for postgresql to be running

One of the important distinctions between running containers on your local machine and running them in GitLab using docker:dind is that the containers are not available on 'localhost' -- they are available on the docker:dind container.

If you want to talk to this container, in your scenario, the postgres container would be available on docker:5432 (docker being the hostname of the docker:dind container where your postgres container has its port mapping).

Illustration with simple HTTP service container

As a simplified example if you were to run the container strm/helloworld-http locally with a port mapping, the following works:

docker run -d --rm -p 80:80 strm/helloworld-http
# give it some time to startup
curl http://localhost  # this works

However, the same setup in GitLab does not:

myjob:
  variables:  # these variables are not necessarily required
    DOCKER_TLS_CERTDIR: ""
    DOCKER_HOST: "tcp://docker:2375"
  services:
    - docker:dind
  script:
    - docker run -d --rm -p 80:80 strm/helloworld-http
    - sleep 10
    - curl http://localhost  # Fails!

One fix would be to use the docker hostname instead:

script:
    - docker run -d --rm -p 80:80 strm/helloworld-http
    - sleep 10
    - curl http://docker  # works!

You are using the wrong environment vars names:

DB_NAME should be POSTGRES_DB

DB_USER should be POSTGRES_USER

DB_PASS should be POSTGRES_PASSWORD

Check https://hub.docker.com/_/postgres/