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The gold futures contract traded on the Multi Commodity Exchange (MCX) witnessed a sharp rally in the evening session on Friday.
A rise in the global gold prices triggered by short-covering helped the domestic gold price to also move up and close higher last week.
The global spot gold ($1,190/oz) has breached its important resistance at $1,183. It can rise to test the psychological resistance at $1,200.
A strong break above this level can take the gold price higher to $1,220 in the short-term.
On the other hand, a reversal from $1,200 can bring in fresh selling pressure in the market and drag the price lower to $1,180 and even $1,160.
On the domestic front, the MCX-gold futures contract has risen decisively above ₹26,000. This level will now serve as a support for the contract.
While above this level a rise to ₹27,100 looks likely now. Further rise above this level can take MCX-gold futures contract to the next target of ₹27,800.
The short-term outlook for the rupee is bearish. A fall in rupee could also help in pushing the MCX-gold futures contract higher.
Traders with a short-term perspective can go long in this contract. Stop-loss can be kept at ₹25,950 for the target of ₹27,000.
The outlook will turn bearish only if MCX-gold futures contract declines below ₹26,000. Such a fall can drag the contract lower to ₹25,500 and ₹25,000.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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