Gold forecast: XAU/USD stabilises after recent falls – for now

Gold has started the first week of the new month trying to recover some ground after another bruising week. Oil prices have taken a sharp drop and that has allowed risk assets to bounce back, which has clearly helped the precious metal too. However, with sentiment remaining bearish towards the metals, and with $4000 level having been taken out last week, the path of least resistance is to the downside for gold. Precious metal investors remain concerned about tight policy and the potential for further rate hikes amid the energy shock keeping inflation elevated. Will we see further losses for gold this week? For now, the near-term risks to our gold forecast remains tilted to the downside.

 

Keep an eye on the AI trade which lost its footing

 

Gold and stock markets sold off in unison last week, before both rebounded at the start of today’s session. So, it is worth keeping on eye on the stock markets as it could provide direction for gold. Intel's earnings results revived concerns around the AI trade, while we also had weaker numbers from several other tech firms. Apple is the latest tech company to produce its results after the closing bell. Any weakness here could further exacerbate the tech sell-off. That in turn could undermine appetite for other risk assets, including gold.

 

Midterms and its impact on gold forecast

 

Tuesday's US midterm elections could have important implications for the financial markets. A split or Democrat-run Congress would make it harder for President Trump to achieve his goals, whether that is domestic legislation or foreign policy. A full Democratic sweep, in which the party wins control of both the House of Representatives and the Senate on the same night, is increasingly likely. That would severely restrict the president's agenda and potentially raise concerns over government shutdown risks and debt-ceiling negotiations. You’d think that scenario would be dollar-negative, and therefore gold-positive.

 

Hawkish central banks offer little relief

 

The macro backdrop is not helpful for gold right now. The Federal Reserve kept interest rates unchanged at its meeting last week, but a December rate hike is highly likely. US data has given the Fed little reason to sound more dovish, with third-quarter GDP expanding by 3.4% and core PCE inflation rising 0.3% month on month in September.

 

Rate hike expectations are building elsewhere too. The Bank of England is expected to raise rates to 4% on Thursday, as energy prices continue to climb because of the war in the Middle East. Friday's non-farm payrolls report is the highlight of the week for US investors, and a strong print would cement expectations for a December hike.

 

Gold technical analysis

 

Gold may be oversold but for now the trend remains bearish. Following the sell-off last week, the near-term bearish gold forecast was cemented as the metal broke below the key long-term support around the $4,000 area. Pressure was building for a breakdown for weeks and now that the sellers have manages to send prices below this level, they are the group of traders in control of near term price action until we see evidence to suggest otherwise. The lower lows and lower highs, combined with the fact that price is below all the major moving averages point to a bearish trend indeed.

 

 

Key resistance levels to watch

 

The path of least resistance remains to the downside for XAUUSD, and rallies back into this former support zone could be sold into this week.

 

More specifically, we’re looking at the area between the June low and the $4,000 psychological level, which could now act as resistance.

 

The June low comes in at $3,942, so the $3,942 to $4,000 area is the key resistance zone to watch.

 

A potential break back above that zone would likely trigger a short-squeeze rally, particularly if price also goes on to take out the short-term trend line that has been in place since early September.

 

Additional resistance comes in around the $4,066 to $4,105 area. That’s roughly where the previous selling started.

 

We also have the 21-day exponential moving average converging with that short-term bearish trend line.

 

Clearly, a move above this zone would sharply improve the technical outlook for gold. If that happens, we could see a more significant short-squeeze rally develop over the days and weeks ahead.

 

What are the downside targets?

 

On the downside, there aren’t many obvious prior reference points for sellers to target.

 

So, round-number levels such as $3,800, $3,700 and below could become the next downside targets.

 

The Fibonacci extension levels drawn from the June rally to the August peak come in at $3,737 and $3,476. These represent the 127.2% and 161.8% extension levels respectively.

 

Meanwhile, the next major level is $3,500, which is both psychologically important and a significant historical support and resistance level.

 

This was an important level back in April 2025 before gold eventually broke above it in August and September 2025.