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The gold futures contract traded on the Multi Commodity Exchange (MCX) has been trading in a sideways range between ₹27,350 and ₹28,600 for 10 gm over the last four weeks.
On the global front, after a sharp fall initially in last week, the spot gold price found support at $1,290/ ounce. It has then reversed higher again above the psychological $1,300 level.
While above $1,300, the probability is high for it to rise to $1,330 in this week once again. There is no immediate threat for a sharp fall in gold unless it records a strong close below $1,300.
As such, the downside could be limited for the MCX-gold futures contract which moves in tandem with the global price. So, within the current range-bound movement, the bias is bullish for the MCX-gold.
Traders can consider taking long position now. But the stop-loss has to be little wider at ₹27,350 since the contract is trading sideways. The long position can be squared-off at ₹29,200.
The 21-day moving average at ₹27,768 is the immediate support for the contract which can limit the intra-week dips.
Resistance is placed at ₹28,600. A breach of this level will take the contract higher to ₹29,300 in the short term.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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