The gold futures contract traded on the Multi Commodity Exchange extended its decline and fell by ₹151 or 0.6 per cent in the week ago. However, on Monday, the contract advanced approximately ₹120 and is trading around ₹25,500 per 10 gm. The contract now tests a key support at ₹25,500 levels. Traders with a short-term perspective should tread with caution as long as the contract tests the current support level. The contract trades well below its 50 and 200-day moving averages. A strong downward breakthrough below the current support will strengthen the contract’s downtrend and indicate a sell. In this case, the traders can consider initiating fresh short position while maintaining a fixed stop-loss.

The yellow metal can extend its short-term downtrend and reach the price target of ₹25,000 or even ₹24,500 levels in the short term. However, upward reversal from current support can lead to a corrective rally and take the contract higher to ₹25,800 and then to ₹26,000 in the near term.

The contract needs to decisively breach the key resistance level of ₹26,300 to alter the short-term downtrend and take it higher to ₹26,500 levels.

On the global front, the spot gold hovers at $1,088/ounce. It currently tests a significant support level of $1,080. An emphatic breakthrough of this level can pull the price down to $1,050 in the medium term. Conversely, an upward reversal can encounter resistances at $1,100 and $1,125 in the short term.

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

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