The gold futures contract traded on the Multi Commodity Exchange (MCX) has tumbled 1.8 per cent last week. Market is turning cautious ahead of the US Federal Reserve’s meeting on Wednesday.

Increasing fear in the market that the US could signal an early interest rate hike is dragging the gold price lower.

The global spot gold price fell about 3 per cent last week. It dropped below $1,250 per ounce and recorded a low of ₹1,228.

Though the yellow metal has recovered slightly from this low, it has strong resistances coming up at $1,240 and $1,250 which can restrict any intermediate rallies.

The outlook is bearish and gold can fall to test its next supports at $1,217 and $1,185 in the coming days.

On the domestic front, the MCX-gold futures contract has reversed higher from Friday’s low of ₹26,790 per 10 gm on the back of weak rupee coupled with a recovery in the global spot price on Monday.

The contract is currently trading near ₹27,200. Significant resistances are poised at ₹27,320 – the 38.2 per cent Fibonacci retracement level and at ₹27,485 – which is a trendline as well as the 50 per cent Fibonacci retracement resistance level.

An immediate breach above ₹27,485 looks unlikely. Such a reversal from this level will keep the overall down trend intact and drag the contract lower to ₹26,400 in the coming days.

Traders with a short-term perspective can go short at ₹27,350 with a stop-loss at ₹27,700 for the target of ₹26,700.

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

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