Gold starts the first week of October under pressure after a sharp decline in September. XAU/USD ended the previous week near $4,140 as a stronger US Dollar and elevated Treasury yields continued to weigh on the precious metal. Gold also failed to hold its recovery after the latest US employment report, showing that sellers remain active around current levels.
For the first week of October, our view remains bearish, with the possibility of another move lower if selling pressure continues. The main downside level we are watching is $4,030.
Fundamental Outlook
The fundamental picture remains challenging for gold.
The September US jobs report showed that nonfarm payrolls increased by only 29,000, well below expectations. The unemployment rate also moved higher to 4.2%. At first glance, weaker employment should normally support gold by reducing expectations for higher interest rates. However, the market reaction has been more complicated because Treasury yields remain elevated and the US Dollar continues to attract demand.
The Federal Reserve will remain at the center of the gold market during October. The latest employment figures have sharply reduced expectations for an October rate hike, with markets now leaning toward the Fed keeping rates unchanged later this month. However, the Fed’s continued focus on inflation means that traders are not yet convinced that monetary policy will turn clearly dovish.
This combination is important for gold. A weak labor market can support XAU/USD, but if Treasury yields remain high and the Dollar stays firm, the metal may struggle to build a sustainable recovery.
Recent market data also show how important yields have become. US 10-year and 30-year Treasury yields recently reached their highest levels since 2002, creating additional pressure on non-yielding assets such as gold.
Gold Technical Analysis – XAU/USD
From a technical perspective, the short-term structure remains bearish.
Gold has already experienced a substantial correction and is trading well below its recent highs. The recovery following the weak US jobs report was unable to establish a clear bullish reversal, which suggests that sellers are still controlling the broader short-term trend.
For the first week of October, the key level on the chart is $4,030.
Bearish Scenario: Gold Could Fall Toward $4,030
If XAU/USD remains under selling pressure and fails to recover convincingly, another decline toward $4,030 could be the main scenario for the week.
A move toward this level would represent a continuation of the September correction rather than a new long-term trend by itself. However, the reaction around $4,030 could become important for the next phase of the market.
The bearish scenario would become more likely if the US Dollar strengthens further, Treasury yields remain elevated, or Federal Reserve officials maintain a hawkish tone.
At the same time, traders should watch the market’s reaction to US economic data rather than focusing on a single indicator. The latest payrolls report showed clear weakness in employment, but gold still struggled to maintain its initial gains. This highlights the current importance of yields and the Dollar in determining the direction of XAU/USD.
What Could Drive Gold This Week?
With the September payrolls report already released, the market will shift its attention toward the Federal Reserve’s communication and incoming US economic data.
The FOMC minutes will provide further insight into policymakers’ views on inflation, employment and the possibility of another rate move later in the year. Meanwhile, movements in Treasury yields and the US Dollar are likely to remain important short-term drivers for gold.
For traders, the key question is whether the recent weakness in gold can accelerate. If yields remain high and the Dollar continues to perform well, the pressure on XAU/USD could persist.
Gold Price Prediction for Week 1 of October 2026
Our outlook for the first week of October remains bearish.
Gold is currently showing signs of weakness, and the failure of the latest recovery to develop into a stronger rebound keeps the downside scenario in focus.
The main target for this scenario is $4,030.
A move toward this level would keep the September correction intact and could put the market at an important technical decision point. For now, we believe the combination of elevated Treasury yields, a firm US Dollar and continued uncertainty over the Federal Reserve’s policy path creates an environment in which gold remains vulnerable to further selling.
Conclusion
The first week of October could be another difficult period for gold bulls. Although weaker US employment data have reduced expectations for an October Fed rate hike, high Treasury yields and a relatively strong US Dollar continue to limit the recovery in XAU/USD.
From a technical perspective, the market remains vulnerable, and $4,030 is the key downside level for our weekly bearish scenario.
If selling pressure continues, gold could gradually move toward this area during the week. The reaction around $4,030 will then be important in determining whether the correction is approaching exhaustion or whether sellers remain in control.
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Disclaimer
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