Last week, the gold futures contract traded on the Multi Commodity Exchange (MCX) was volatile; it continued the rally and recorded an intra-week high at ₹29,756 per 10 gm before declining 1 per cent on Friday. The contract closed the week with a small gain of ₹62 or 0.2 per cent at ₹29,021. On Monday, the contract inched higher by ₹105 or 0.4 per cent to trade at ₹29,126. It now tests a key support at ₹29,000.

The contract has failed to move past the significant resistance level of ₹29,500 over the past two weeks. Friday’s fall has resulted in formation of a bearish engulfing candlestick pattern which is a reversal pattern. A decisive fall below the immediate support at ₹29,000 will strengthen the bearish momentum and drag the contract down to ₹28,715 and then ₹28,500 in the coming weeks. Hence, traders with a short-term perspective can initiate fresh short position only on an emphatic fall below the immediate support at ₹29,000 with a stop-loss at ₹29,350. Further decline below ₹28,500 can find support at ₹28,000. Conversely, if the contract manages to break through the key resistance level of ₹29,500, it can reinforce the bullish momentum and take it upwards to ₹30,000 in the short term. Next resistance is placed at ₹31,000. The medium-term uptrend that has been in place since December 2015 will remain intact as long as the contract trades above ₹27,500.

On the global front, the spot gold price was also choppy and ended the week on a flat note at $1,233 per ounce. Since early February, the yellow metal has been on a sideways consolidation phase in the band between $1,200 and $1,260. The metal tests the upper boundary of ₹1,260. Strong rally beyond this level can take it higher to $1,280 and $1,300 in the short term. However, an emphatic slump below the immediate support at $1,220 can drag the metal price down to $1,200. Subsequent supports are at $1,180 and $1,160.

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