The near-term outlook for the gold futures contract traded on the Multi Commodity Exchange (MCX) remains bearish. The contract tumbled 3.7 per cent last week. The sharp fall in the global spot gold price and the rupee recovering from the low of 67.75 to 67 also dragged the domestic futures contract lower in the past week.

The MCX contract has declined below the 100-day moving average support and is currently trading at ₹28,475 per 10 gm. The next support is in between ₹28,000 and ₹27,850 which is likely to be tested in the coming days. Short-term traders with high risk appetite can go short with a tight stop-loss at ₹28,700 for the target of ₹28,000.

Whether the contract manages to reverse higher from the above mentioned support zone or breaks below it will decide the next leg of move. A reversal from ₹28,000 or ₹27,850 will ease the downside pressure and can take the contract higher to ₹28,500 and ₹28,700. On the other hand, a strong break below ₹27,850 will increase the downside pressure and drag the contract to test the 200-day moving average support at ₹27,330.

On the global front, the spot gold price ($1,205/ounce) is hovering above the psychological $1,200 level. Important supports are at $1,190 and $1,185 which is likely to be tested in the coming days. A strong break below $1,185 can drag the price lower to $1,160. On the other hand, a reversal from $1,190 or $1,185 can take the spot gold price higher to $1,200 and $1,225 once again in the short-term.

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

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