The downward reversal in the gold futures contract traded on the Multi Commodity Exchange (MCX) from last week’s high of ₹26,833/10 gm is not gaining momentum.

Thanks to the surprise interest rate cut from China on Friday which has helped the global spot gold price to surge above $1,200 per ounce last week. This in turn has limited the fall in MCX-gold futures contract.

The global spot gold ($1,194) price has come down slightly on Monday and is now trading below $1,200. The short-term outlook is not very bearish and still the chances of a rally to $1,220 cannot be ruled out.

The spot gold has a key support at $1,185. The outlook will turn bearish only on a strong decline below this level.

On the domestic front, the MCX-gold futures contract also has significant supports at ₹26,300 – the 21-day moving average level and ₹26,000. The outlook remains bullish while the contract trades above these support levels.

Traders who have taken long positions last week can hold on to their positions with the stop-loss at ₹25,950 and for the target of ₹27,000.

Traders who are not holding any positions can go long at current levels with the same stop-loss at ₹25,950 and for the target of ₹27,000.

The outlook for the MCX-gold futures contract will turn negative only on a strong break below ₹26,000. The ensuing targets on such a break will be ₹25,500 and ₹25,200.

Note: The recommendations are based on technical analysis. There is a risk of loss in trading.

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