Gold Price Forecast: XAU/USD Two-Week Plunge Puts August Breakout to the Test
Gold has reversed sharply into major support, with a decline of nearly 9% setting up the first meaningful test of the August breakout.
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Gold Technical Forecast: XAU/USD Weekly Trade Levels
- Gold has reversed sharply from the August highs, with the two-week decline extending nearly 9%.
- Bulls have defended support at the 2026 yearly open with the September range taking shape just above.
- The August breakout remains technically viable for now, but bulls need to stabilize the current decline to preserve the broader recovery.
- U.S. PPI and CPI headline next week’s event risk as markets reassess the outlook for Fed policy
- Resistance 4493-4533, 4681, 4855/94 (key)- Support 4319, 4175 (key), 4018
Gold is attempting to stabilize after a sharp two-week decline reversed a large portion of the August advance. The pullback has brought XAU/USD back to an important inflection point, with the focus now on whether bulls can regain control and revive the broader recovery. Key U.S. inflation data next week could provide the catalyst for the next major directional move. Battle lines drawn on the XAU/USD weekly technical chart.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold setup and more. Join live on Monday’s at 8:30am EST.
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, “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.” A three-week rally exhausted into the 50% retracement of the March decline near 4681 (intraday high registered at 4603) with the subsequent pullback extending more than 8.8% off the high. The decline was halted this week near yearly open support at 4319 with the September opening range taking shape just above. The bulls will need to secure this decline to keep the August breakout viable in the weeks ahead.
Initial resistance is eyed back at the March low-week close / 2025 high close at 4492-4533 with a breach of the August high exposing the next major technical consideration at 4855/94. This key pivot zone is defined by the 61.8% retracement, the April high, and the record high-week close. A breach / weekly close above this threshold is needed to fuel the next leg of the advance. Subsequent resistance objectives eyed at the 100% extension at 5037 and the record high close at 5279.
A break below the yearly open exposes the 2026 low-week close at 4175. Former channel resistance converges on this level over the next few weeks and losses below this slope would invalidate the August breakout and threaten a retest of the low-close at 4018- look for a larger reaction there IF reached.
Bottom line: This is the first major test for the August breakout, and the bulls will need to secure this decline to stay in control. Although momentum has deteriorated, daily & weekly RSI remain in positive territory for now. Look for 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 towards 4900.
Friday’s stronger-than-expected Non-Farm Payrolls report underscored the resilience of the U.S. labor market, shifting the focus squarely to the final inflation readings ahead of this month’s Fed rate decision. August PPI and CPI will be critical as markets remain divided on the central bank’s next move, with Fed funds futures currently pricing just a 58% probability of a 25-basis-point hike. A hotter-than-expected inflation report could tip expectations more decisively toward additional tightening, fueling another rise in Treasury yields and the U.S. dollar while increasing pressure on gold. Conversely, softer price data could temper rate-hike expectations and provide bullion with a more supportive backdrop heading into the Fed. Stay nimble into the releases 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.
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--- Written by Michael Boutros, Senior Technical Strategist
Follow Michael on X @MBForex
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