The gold futures contract traded on the Multi Commodity Exchange (MCX) has witnessed a strong upward reversal after an initial fall last week. The contract made a low of ₹24,757 per 10 gm on Thursday and then spiked to a record high of ₹25,685 on Friday. This rally was aided by a strong rise in the global spot gold price. Rupee weakening to 67 levels against the US dollar last week has also supported the metal’s up move in the domestic futures contract.

The MCX gold futures contract is currently trading at ₹25,640. The immediate outlook is not clear since the contract has risen sharply in a short span of time. The contract needs to settle down and give a clear signal on the next direction of the move. Hence, traders can wait on the sidelines for some time.

Immediate support is at ₹25,600. The next key supports are at ₹25,500 and ₹25,350. Dips to test these supports in the coming sessions cannot be ruled out. A reversal from these supports can keep up the bullish momentum and take the contract higher to ₹26,000 as well in this week. On the charts, the probability looks high for the contract to rise to ₹26,000. A strong break and a decisive close above ₹26,000 will reduce the danger of seeing any fresh fall in the contract thereafter. However, the contract will come under renewed pressure if it declines below ₹25,000 once again. Such a break will keep the contract’s downtrend intact that has been in place since October. In such a scenario, the contract can fall to ₹24,500 or even ₹24,000.

On the global front, the spot gold price ($1,082/oz) has reversed sharply higher after testing an important support at $1,050 last week. Immediate supports are at $1,080 and $1,075. As long as the spot price remains above these supports, a rise to $1,100 is possible in the coming days.

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

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