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The gold futures contract traded on the Multi Commodity Exchange (MCX) has tumbled over 2 per cent in the past week. The outlook continues to remain weak.
The contract has dropped below its 200-week moving average at ₹27,471 per 10 gm which could add more pressure.
On the global front, the spot gold price has been facing strong resistance near $1,275 per ounce over the last few days. Inability to breach this resistance can drag the price lower to $1,250 or even $1,240 in the coming days.
A fall in global gold price could drag the domestic price also down. The resistance for the MCX-gold futures contract is at ₹27,650.
Intra-week rally to this level can attract fresh selling interest coming into the market.
Traders with a short-term perspective can make use of such rallies to initiate fresh short position at ₹27,600.
Stop-loss can be kept at ₹27,850 for the target of ₹27,150.
Support for the contract is at ₹27,000.
A reversal from here can keep the contract in a sideways range of ₹27,000 and ₹28,000 for some time.
But a strong break below ₹27,000 will leave the MCX-gold futures contract in a big danger of revisiting its previous low of ₹25,755 over the medium term.
The outlook will turn bullish only if the contract records a strong close above ₹28,000.
(Note: The recommendations are based on technical analysis. There is a risk of loss in trading.)
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