Gold Price Forecast: XAU/USD Plunges 12.4% Toward Critical Support

Gold Technical Forecast: XAU/USD Weekly Trade Levels

• Gold has declined in five of the past six weeks following the August peak with bearish momentum building.
• XAU/USD is now approaching a major support confluence where the immediate downside bias becomes increasingly vulnerable to price inflection.
• A weekly close below support would validate renewed downside continuation and expose the yearly low as the next major objective.
• The yearly open now marks initial resistance, with a stronger recovery required to suggest that a more meaningful low is developing.
• Friday’s Non-Farm Payrolls report is the next major catalyst after softer inflation increased expectations for an October Fed hold.
• Resistance 4319, 4451, 4493-4533 (key)- Support 4104 (key), 3943, 3800

Gold enters October under heavy pressure after the September range broke lower, extending the decline from the August high to more than 12%. The selloff has now carried XAU/USD toward a major support zone just as momentum and event risk converge into Friday’s Non-Farm Payrolls report. With softer Core PCE shifting expectations toward a potential Fed hold this month, the next reaction will be important in determining whether gold can stabilize from current levels or whether the broader March decline resumes into the fourth quarter. Battle lines drawn on the XAU/USD weekly technical chart.

Gold Price Chart – XAU/USD Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView

Technical Outlook: In last month’s Gold Technical Forecast we noted that XAU/USD had turned from resistance and that our focus was on, “a breakout of the September opening range for guidance. From a trading standpoint, losses would need to be limited to 4175 IF gold is heading higher on this stretch with a breach above 4681 needed to fuel the next leg of the advance..” The September range broke lower three-weeks later with gold plunging more than 12.4% from the August high. Price has declined five-of-the-past-six weeks with XAU/USD now approaching the support ahead of tomorrow’s highly anticipated Non-Farm Payrolls report.

The 78.6% retracement of the June advance converges on the 2025 May trendline (red) at 4104 and a break / weekly close below this zone would be needed to mark resumption of the March downtrend. Subsequent support objectives rest at the yearly low at 3942 and 3800 which converges on the 2024 uptrend over the next few weeks.

Initial weekly resistance is now eyed back at the objective yearly open at 4319 and is backed by the 52-week moving average, currently near 4451. Note that the upper parallel of the yearly downtrend converges on this level into the start of the month. Ultimately, the bulls would need to clear the March low-week close (LWC) and the 2025 high close at 4493-4533 to suggest that a more significant low is in place and a larger trend reversal is underway.

Bottom line: Gold is approaching confluent support into the start of the month with major event risk on tap tomorrow- risk for possible inflection into this zone with the immediate short bias vulnerable while above. From a trading standpoint, the risk remains tilted to the downside while below 4319 with a break / weekly close below 4104 needed to fuel the next leg lower in price.

Event risk remains elevated for gold into the start of October with the highly anticipated U.S. Non-Farm Payrolls report on tap tomorrow. Consensus estimates call for a gain of 90K jobs with the unemployment rate expected to hold steady at 4.1%. With Core PCE coming in softer than expected this week, attention now shifts to the employment data for the next cue on Fed policy. Markets currently price roughly a 70% probability of a hold this month, while the odds of at least one 25-basis-point hike by year-end stand near 80%. A stronger jobs report could revive expectations for an October hike and pressure gold through higher yields and a firmer dollar, while a softer print could reinforce expectations for a near-term hold and offer support for bullion. Stay nimble into the release and watch the weekly close for guidance. Review my latest Gold Short-term Outlook for a closer look at the near-term XAU/USD technical trade levels.

Key US Economic Data Releases

--- Written by Michael Boutros, Senior Technical Strategist

Follow Michael on X @MBForex