Gold futures traded on the Multi Commodity Exchange (MCX) have been stuck in the ₹26,500-27,500 per 10 gm range for over three weeks. Currently, the contract is poised near the mid-point of this range at ₹26,950.

The contract failed to take cues from the global spot gold price ($1,220 per ounce) that increased sharply last week. The strengthening of the rupee against the dollar kept the domestic price of gold under check. MCX-gold futures contract could continue to trade inside this range for some more time unless there is a sharp reversal in the rupee movement.

Since the contract bounced back from the low of ₹26,668 on Friday, there is a possibility for it to extend this up move and head towards ₹27,500 – the upper end of the range in the coming days. Intermediate resistance is at ₹27,000. A break above this level is likely to increase the momentum and take the contract higher to ₹27,500.

Investors can wait until the contract breaks above ₹27,000 and go long at ₹27,100. Stop-loss can be placed at ₹26,850 for the target of ₹27,400.

A breakout on either side of ₹26,500 and ₹27,500 will decide the next trend for the contract over the medium-term. A break below ₹26,500 will be bearish and the contract can target ₹25,500. On the other hand, a bullish break above ₹27,500 can take the contract higher to ₹28,000 immediately. A further break above ₹28,000 will pave way for a fresh rally to ₹29,000.

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

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