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The corrective rally witnessed in the gold futures contract traded on the Multi Commodity Exchange (MCX) seems to be losing momentum. The contract which is currently trading near ₹27,950 for 10 gm has given back some of its gain after recording a high of ₹28,178 on Thursday.
The rally in the global gold spot price which seemed to be on course to breach the psychological $1,300 per ounce level last week halted and reversed after the strong US GDP data release. The MCX-gold also took cues from the global price and has turned lower now.
Technically, the 21-day moving average at ₹28,200 has held well and is maintaining the pressure on the contract. Immediate support is at ₹27,875 – the 55-day moving average and the significant support is at ₹27,700. A daily close below ₹27,875 will increase the probability of a fall below ₹27,700. A break below ₹27,700 can drag the contract lower to ₹27,435 – the 200-week moving average support level.
Traders who have taken short position at ₹28,000 last week can hold the position with the same stop-loss at ₹28,250 for the target of ₹27,500.
The 21-day moving average at ₹28,200 is a key resistance level for the contract. The outlook will turn bullish only if the contract records a strong close above this level. Such a break can take the MCX-gold futures contract higher to ₹28,500.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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