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The outlook for the gold futures contract traded on the Multi Commodity Exchange (MCX) is bullish.
The 21-day moving average—at ₹26,145 for 10 gm – lent support and the contract reversed higher from this level last week. It is currently trading near ₹26,980.
A series of weak economic data releases from the US triggered this reversal. The upward momentum increased after the weak US jobs data release on Friday.
Strong support for the contract is at ₹26,450. Declines to this level could attract fresh buying interest. Resistance is at ₹27,220.
A break above this level can take the contract higher to ₹27,500 and ₹28,200.
Traders can go long. Stop-loss can be placed at ₹26,350 for the target of ₹27,850. Intermediate declines to ₹26,500 can be used to accumulate long positions.
On the global front, the spot gold price ($1,217/ounce) surged on Monday and is testing its key resistance at $1,220.
A strong break and close above this resistance will be bullish. It will confirm an inverted head and shoulder reversal pattern on the daily chart.
The ensuing targets on such a break will be $1,250 and even $1,300 – the target level of the reversal pattern.
Supports are at $1,211 and $1,200 which could limit the downside. This could also push the MCX futures contract higher, moving in tandem with the global price.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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