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As expected, the gold futures contract traded on the Multi Commodity Exchange (MCX) has dropped in the past week.
The 200-day moving average level of ₹28,760 per 10 gm is continuing to pose a hurdle for more than a week.
The contract can decline in the coming days. But the bullish outlook is not under threat.
On the global front as well the spot gold price is signalling the possibility of a fall below the psychological $1,300/ounce level. The price can fall to $1,280 in the coming days which can drag the domestic prices also lower.
Key supports for the MCX gold futures contract are at ₹28,250 and ₹28,000.
Traders can wait for reversal from the ₹28,000 level.
In that case, traders can initiate fresh long position at ₹28,100. Stop-loss can be kept at ₹27,800 for the target of ₹28,700.
The bullish outlook will gain momentum if the contract records a strong break and closes above the 200-day moving average level. Such a break can take the contract higher to ₹29,300.
The outlook for the MCX-gold futures contact will turn bearish only on a strong break below ₹28,000.
The ensuing target on such break will be ₹27,700.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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