Gold Price Forecast: XAU/USD downside opening up toward $3,950?

Gold extends losing streak into early Tuesday, looks to retest $4,000.
US Dollar holds recent rebound amid risk-off markets, hawkish Fed commentary.
Gold closes Monday below 21-day SMA, as the daily RSI flips bearish.

Dhwani Mehta FXStreet

Gold remains vulnerable early Tuesday, extending a four-day losing streak as US Dollar (USD) buyers hold the ground, eagerly awaiting the critical September Nonfarm Payrolls (NFP) report on Thursday.

Gold suffers from less dovish Fed expectations

Gold licks its wounds near five-day troughs of $4,006 reached on Monday, uninspired by broad risk aversion, amid a sustained US Dollar turnaround.

The Asian markets track Wall Street indices lower, as concerns over the US labor market and the AI overvaluations resurface ahead of the key quarterly earnings from chipmaker Nvidia on Wednesday.

Risk-off flows keep the sentiment around the US Dollar underpinned, weighing down on the USD-denominated Gold.

The Greenback also draws support from the recent slew of hawkish talks by US Federal Reserve (Fed) officials, which slashed the bets for another 25 basis points (bps) rate cut in December to 42%, according to the CME Group’s FedWatch Tool.

Fed Vice Chairman Philip Jefferson noted on Monday the US central bank needed to "proceed slowly" with further rate cuts, per Reuters.

The late pullback in the benchmark US 10-year Treasury bond yields due to risk-aversion-led rally in US Treasuries, fuelled a modest rebound in Gold. The bright metal settled Monday at around $4,040, having tested the $4,000 threshold earlier in the day.

Looking ahead, Gold remains exposed to downside risks as the USD will likely hold the fort before the release of missed mid-tier US economic data. Speeches from Fed officials will also be closely scrutinized for fresh signals on the Fed’s policy path.

However, the main event risk for this week is the US September jobs report, albeit stale, is eagerly awaited for fresh hints on the state of the labor market, following the recent series of downbeat private sector employment data.

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,022.86. The 21-day Simple Moving Average (SMA) at $4,048.65 has turned lower, with price holding beneath it and signaling waning near-term momentum. The 50-, 100-, and 200-day SMAs at $3,954.55, $3,669.05, and $3,421.00 continue to rise and sit below price, reinforcing the broader bullish bias. The Relative Strength Index (RSI) eases to 49 (neutral), underscoring cooling upside pressure.

Measured from the $4,381.17 high to the $3,885.84 low, the 38.2% retracement at $4,075.05 acts as near-term resistance, with the 50% retracement at $4,133.50 above. A daily close back above the 21-day SMA would open a push toward those barriers, while a rejection keeps pressure toward the 50-day SMA at $3,954.55 and maintains a consolidative tone within the broader uptrend.

(The technical analysis of this story was written with the help of an AI tool)

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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