The strengthening of rupee against the US dollar last week has halted the rally in the gold futures contract traded on the Multi Commodity Exchange (MCX). The contract recorded a high of ₹27,245 per 10 gm on Thursday and has reversed lower from there. It is currently trading near ₹26,950. Immediate support is at ₹26,900 – the 21-day moving average and the next support is at ₹26,770 – the 200-day moving average. A dip to test these supports is possible in this week. Whether the contract breaks below ₹26,770 or not will decide its next trend. Traders can stay out of the market at the moment.

If the contract reverses higher from ₹26,700 then a rise to ₹27,000 or even to ₹27,500 could be possible. In such a scenario, traders can go long at ₹26,850. Stop-loss can be kept at ₹26,450 for the target of ₹27,350. On the other hand, if the contract breaks below ₹26,770 it can fall to ₹26,500 immediately. A further break below ₹26,500 will be bearish for the next target of ₹26,000.

On the global front, the spot gold ($1,193/ounce) has come off sharply after recording a high of $1,206 on Thursday. Technically, the 200-day moving average has halted the rally last week that had begun from around $1,175 levels. Support is at $1,185. Whether this support is getting breached or not will decide the next leg of move. A break below it can take the spot price lower to $1,175 and $1,170 once again. On the other hand, a reversal from $1,185 can take the price higher to $1,200. A strong break and close above the 200-day moving average resistance at $1,206 is required to increase the bullish momentum for the next targets of $1,220 and $1,230.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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