The bearish outlook for the gold futures contract traded on the Multi Commodity Exchange remains intact.

The contract fell 2 per cent last week and has closed in the red for the last four consecutive weeks. The recent fall has dragged the contract below an important support at ₹28,500 per 10 gm. It has also dropped below the 55-day moving average at ₹28,370.

It is currently trading near ₹28,100 per 10 gm. The contract could face strong resistance in the ₹28,350-₹28,800 zone. Intraweek bounce to this resistance zone could see fresh selling interest.

The contract can now fall to ₹27,500 – the 50 per cent Fibonacci retracement support level. Further break below this support can see the fall extending to ₹27,000 thereafter.

Traders with a short-term perspective can go short in this contract. Stop-loss can be kept at ₹28,900 for the target of ₹27,200.

Intermediate bounce to ₹28,500 and ₹28,700 can be used to accumulate short positions.

The downside pressure on the contract will ease only on a strong break above the 21-day moving average near ₹29,000.

On the global front, the spot gold price has reversed lower after facing resistance near $1,245 – the 21-day moving average. It is currently trading near $1,215/ounce.

A fall to test the next support in $1,200-$1,195 zone looks likely in the coming days.

This $1,200-$1,195 is a strong short-term support. A reversal to $1,220 or even $1,240 once again cannot be ruled out from there.

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

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