The gold futures contract traded on the Multi Commodity Exchange (MCX) has increased over one per cent in the past week. The contract has breached its psychological resistance at ₹27,000/10 gm which was restricting the rally. Although the contract has come off from its high of ₹27,245 on Monday, it has good support at ₹26,980 that can limit the fall. As long as the contract trades above this support level, the outlook will remain bullish.

On the global front, the spot gold ($1,226/ounce) has reversed sharply higher after recording a low of ₹1,183 on October 6. Technically, this reversal is significant as it happened from just above an important trend line support at ₹1,180. The strong and immediate breach of the psychological $1,200 level could add strength to this reversal rally. Supports are available at $1,220 and $1,205. On the charts, the probability is high for gold to sustain above $1,200 in the near-term. Having said this, a rise to $1,240 looks likely in the coming days.

A rise in the global gold price could push the MCX-gold futures contract also higher in the coming days. A rise to ₹27,372 – the 38.2 per cent Fibonacci retracement resistance level on the MCX-gold looks likely in the coming days. A break above this resistance can take the contract further higher to ₹27,650

Traders with a short-term perspective can go long with a stop-loss at ₹26,850 for the target of ₹27,500. The outlook would turn bearish for MCX-gold futures contract only if it declines below its support at ₹26,860 – the 21-day moving average support level. Such a break can drag the contract lower to ₹26,550.

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

Related Topics
comment COMMENT NOW