Gold futures traded on the Multi Commodity Exchange is trading with a negative bias.

The contract failed to sustain above the psychological ₹27,000-per-10-gm support level and fell sharply after spiking to a high of ₹27,796 on Tuesday last week.

It is not gaining momentum to rebound above ₹27,000 after its decline below this level which could keep the contract under pressure. It is currently trading near ₹26,950.

Also, on the global front, the spot gold ($1,197/oz) prices fell sharply from the high of $1,224 and remain subdued below the psychological $1,200-level.

As long as the global spot price trades below $1,200 there is a danger of a further fall in the coming days. Support is at $1,190 which can be tested this week. A break below this level can drag the spot gold price lower to $1,180 or even $1,160 thereafter. On the other hand, a strong rise above $1,200 can take prices higher to $1,210 and $1,220.

On the domestic front, the reversal last week has happened from the 200-day moving average as well as a trend line resistance both currently poised at ₹27,600. So any rally this week will face resistance at ₹27,000.

Having said this, the overall outlook is negative. A fall to test the immediate support at ₹26,600 looks likely.

A break below this level can drag the contract further lower to ₹26,000.

Traders with a short-term perspective can go short at current levels. Stop-loss can be kept at ₹27,400 for the target of ₹26,400.

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

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