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Gold has had a strong beginning in the New Year. The yellow metal has surged about 6 per cent in just little more than two weeks in this year to around $1,218 per ounce on Tuesday. Heightened uncertainty in the market on the back of the Britain’s plan to exit the European Union and the lack of clarity on Donald Trump’s action action plan aided gold to gain the safe haven status which in turn has triggered this sharp price rally.
The gold futures contract on the Multi Commodity Exchange (MCX) which moves in tandem with the global spot prices, has surged over 4 per cent in this year. It is currently trading at around ₹28,700 per 10 gm.
OutlookThe immediate outlook remains bullish for gold. The strong break above the $1,200-$1,205 resistance zone has eased the downside pressure. As long as the prices remains above $1,200, there is a strong likelihood of seeing further rise in the coming days.
The next key resistances are in the bands between $1,230 and $1,240 and then between $1,250 and $1,260. A test of these resistances is likely in the coming days. Inability to break above these resistances can trigger a corrective fall to $1,210 or $1,200.
A strong break above $1,260 is needed for the gold prices to revisit $1,300 levels.
On the domestic front, immediate resistance is at ₹28,800. Inability to break above this hurdle can trigger a corrective fall to test the supports at ₹28,300 or ₹28,000. A subsequent reversal from these supports can take the contract higher to ₹28,800 levels once again.
A strong break above ₹28,800 will see a fresh rise to ₹29,300 or ₹29,500 thereafter. Traders with high-risk appetite can wait for dips and go long on a reversal from ₹28,000. Stop-loss can be placed at ₹27,500 for the target of ₹29,000.
Key support for the contract is in the range between ₹28,000 and ₹27,900. The outlook will turn negative only if the contract declines decisively below ₹27,900. The next targets will be ₹27,650 and ₹27,500.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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