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The fall to ₹26,000/10 gm that was expected in the gold futures contract traded on the Multi Commodity Exchange (MCX) did not happen.
Instead, the contract rose 2.4 per cent last week to record a high of ₹27,135 on Friday. This was due to the weak rupee that fell below 61 levels last week.
The contract is currently hovering just below the psychological level of ₹27,000.
The rupee can continue to be volatile in this short trading week. The commodity trading is closed on Thursday and is open only for the evening session on Friday.
So there could be muted action towards the end of the week.
On the charts, although there is some psychological resistance at ₹27,000, last week’s rise has increased the chances for corrective rally breaching this level in the near term.
As such, a rise to test the next resistance at ₹27,372 in the coming days is possible. This level is a strong resistance as both the 38.2 per cent Fibonacci retracement as well as a trend line is poised near this level.
So the chances for the contract to turn lower from here cannot be ruled out.
Such a reversal can take the contract lower again to ₹27,000 levels. Supports for the contract are placed at ₹26,700 and ₹26,300. Traders with a short-term perspective can go long now with a stop-loss at ₹26,600 for the target of ₹27,320.
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