Gold Price Forecast: XAU/USD Breakout Delivers Best Week Since January
Gold just posted its best week since January, but the breakout now enters the phase that could determine whether a lasting low is finally in place.
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Gold Technical Forecast: XAU/USD Weekly Trade Levels
- Gold has broken decisively above a multi-week consolidation pattern with XAU/USD rallying more than 10% from the yearly low.
- The breakout has already cleared a major technical hurdle, shifting the focus to the yearly downtrend.
- Weekly momentum is beginning to improve, but buyers still need follow-through to reinforce the broader recovery.
- A hold above former range resistance would strengthen the bullish outlook with key resistance eyed at the yearly downtrend.
- Next week's U.S. CPI report could provide the catalyst for gold's next major directional move.
- Resistance 4319/19, 4493-4533 (key), 4855/94- Support 4175, 4002/17 (key), 3887
Gold has delivered its strongest weekly advance since January after breaking decisively above a multi-week consolidation pattern, marking the most significant technical development since the March decline began. The rally has already reclaimed a major resistance zone and shifted attention toward the broader yearly downtrend, but buyers still need confirmation that this week's breakout can develop into something more durable. With key inflation data due next week, traders will be watching closely to see whether gold can build on this recovery and validate a more significant low is finally in place. Battle lines drawn on the XAU/USD weekly technical chart.
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Gold Price Chart – XAU/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; XAU/USD on TradingView
Technical Outlook: In my last Gold Technical Forecast we noted that XAU/USD was trading within, “a well-defined consolidation pattern just above the yearly lows heading into the August open and the focus is on a breakout in the weeks ahead for directional guidance.” The six-week range broke higher this week with the rally extending more than 10.8% off the yearly low. The breakout has already surpassed a major pivot zone and keeps the focus on a potential challenge of the yearly downtrend.
Our initial focus was on the 52-week moving average and the objective yearly open at 4319/30. Both the April channel line and the 25% parallel of the broader uptrend converge on this level and a weekly close keeps this constructive. While daily RSI has now extended to the highest levels since January (above 65), weekly momentum closed neutral (at 50) on Friday. We will want to see some follow through next week and the inflation report may be the catalyst.
Key resistance remains at 4493-4533- a region defined by the March low-week close (LWC), the 38.2% retracement of the March decline, and the 2025 high close. The upper parallel of the yearly downtrend converges on this zone over the next few weeks- look for a larger reaction there IF reached. Subsequent resistance objectives are eyed at the 61.8% retracement and the record high-week close (HWC) at 4855/94.
Initial weekly support now rests at the yearly low-week close (LWC) at 4175 backed by the late-October and July low-closes at 4002/17. A break / weekly close below this threshold would threaten resumption of the yearly downtrend towards the October swing low at 3887 and the lower parallels near ~3700.
Bottom line: Gold has broken out of a multi-week consolidation zone with the advance marking a close above the yearly moving average his week for the first time since June. From a trading standpoint, losses should be limited to 4175 IF gold is heading higher on this stretch – look for a larger reaction on rally towards the upper parallel near 4500.
Following last week's weaker-than-expected Non-Farm Payrolls report, attention now turns to Wednesday's CPI release as the next key test for the Fed's policy outlook. Markets have continued to pare expectations for additional tightening, with Fed funds futures now pricing a 58% probability the Committee remains on hold next month. A softer inflation reading would reinforce that repricing, easing pressure from higher Treasury yields and creating a more constructive environment for gold prices. Watch the weekly closes for guidance here and review my latest Gold Short-term Outlook for a closer look at the near-term XAU/USD technical trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
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