Gold Price Forecast: XAU/USD Plunges 12.4% Toward Critical Support
Author: Michael Boutros
Date: October 1, 2026
Summary
Gold prices have experienced a significant decline, dropping 12.4% from their August peak, with the XAU/USD pair now approaching a critical support level. This downturn has occurred amidst a backdrop of softer inflation data, which has led to revived expectations for a pause in Federal Reserve interest rate hikes. The upcoming Non-Farm Payrolls report is anticipated to be a key catalyst for gold's price movement.
Technical Analysis
The XAU/USD has shown bearish momentum, declining in five of the last six weeks. Currently, it is nearing a major support zone, which, if breached, could lead to further declines. A weekly close below the support level of 4104 would confirm a continuation of the downtrend, with the yearly low at 3942 as the next target. Conversely, resistance is identified at the yearly open of 4319, with a stronger recovery needed to indicate a potential reversal.
Market Outlook
As gold enters October under pressure, the market is closely watching the Non-Farm Payrolls report, which is expected to show a gain of 90,000 jobs and an unemployment rate steady at 4.1%. The softer Core PCE data has shifted market expectations towards a potential hold by the Fed this month, with a 70% probability currently priced in. A stronger jobs report could lead to renewed expectations for a rate hike, negatively impacting gold prices, while a weaker report could support bullion prices.
Conclusion
Gold is at a critical juncture, with significant event risk on the horizon. Traders should remain cautious and monitor the upcoming economic data closely, as it will likely dictate the short-term direction of gold prices.