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The immediate outlook for the gold futures contract traded on the Multi Commodity Exchange (MCX) is not clear.
The contract has been stuck in a sideways range of ₹26,000 and ₹27,000 per 10 gram for more than a month. This range is narrowing and the contract is range-bound between the 21- and the 200-day moving averages which are poised at ₹26,665 and ₹26,971 respectively.
A breakout on either side of ₹26,000-27,000 range will determine the next leg of movement for the contract.
A strong break above ₹27,000 will be bullish. It can take the contract higher to the next targets of ₹27,350 and ₹27,500 thereafter.
On the other hand, the 21-day moving average will be a key level to watch now on the downside.
A decisive daily close below this level will increase the possibility of the contract breaking below ₹26,000 going forwards. The ensuing target on a break below ₹26,000 will be ₹25,000.
Traders can stay out of the market at the moment and wait for the range breakout for a clear trade signal.
The range-bound movement could continue for another couple of days as the market would be waiting for the important US Federal Reserve meeting.
The outcome of this meeting could possibly trigger the range breakout in the gold price.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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