The gold (XAU/USD) outlook for the coming quarter is a tricky one. At the time of this writing, it is sitting on a major level of support around the 1670 line. The level began during the early days of the Covid pandemic, then became a really big low in March 2021.
It has since been tested during July and more recently. If price can’t manage to maintain the level, then the outlook doesn’t appear good as long as the higher rate theme continues to drive the dollar higher and everything else lower.
There is slope support around 1630, and after that nothing until the 2019 high at 1556 and a meaningful level of support around 1451. That is still a good way lower from current levels, but with volatility across markets high it may not take that long to fall there.
If gold can maintain the 1670 area, then a bounce could unfold, but that is only seen as sustainable if the dollar and stocks turn around, which is something that is anticipated at some point during Q4, but perhaps not without a sizable move higher in the dollar and lower in stocks.
Keep an eye on risk trends as we head into October. If stocks get panicky and we see a large spike in the VIX it could signal a turnaround into year-end as the market capitulates. If this is the case, then the dollar is also coming off and other markets such as gold could see a reprieve.
Gold (XAU/USD) Weekly Daily Chart
What makes this tricky with respect to gold and its own technical backdrop, is that we could see a decline below meaningful support and then recovery back above with no real levels in between to lean on. However, a drop below a meaningful level and recovery back above, in itself, will be a reason to flip the bias bullish. Especially if happens in conjunction with the above scenario for the dollar/stocks. Long story short, gold looks vulnerable in the near-term, but could see a tradeable low that leads to higher levels during the latter part of the quarter.
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