Gold prices have faced significant selling pressure over the past nine weeks, declining in seven of them. The weekly Relative Strength Index (RSI) has dropped to its lowest level since September 2022, signaling strong bearish momentum. XAU/USD hit a fresh yearly low on Friday, extending its breakdown from the October opening range for the third consecutive week.
The March downtrend remains intact, but the price is now approaching a critical support zone. This zone, located around 3800/40, is a major confluence of multi-year uptrend and Fibonacci support. A weekly close below this level would threaten the broader multi-year uptrend and could lead to a deeper correction into year-end.
Next week's U.S. midterm elections, ISM data, and Nonfarm Payrolls are key event risks that could influence gold's price action. The Federal Reserve's rate outlook, Treasury yields, and the dollar's strength will remain central drivers. Resistance levels are identified at 4017, 4166 (key), and 4319, while support levels are at 3800/40 (key), 3569, and 3432/39.
The reaction off the critical support zone at 3800/40 will be decisive in determining whether the uptrend survives or gives way to further declines. Traders are advised to reduce short exposure or lower protective stops on a test of this support level. Rallies should be limited to 4166 if the price is heading for a break lower.