The gold futures contract traded on the Multi Commodity Exchange (MCX) was volatile in the previous week. After an initial decline, the contract surged 1.8 per cent on Friday and closed the week with 0.5 per cent gains, at ₹26,112 per 10 gram.

A sharp rise in the global gold price coupled with a sharp fall in the Indian rupee, aided this rally on Friday.

On Monday, the contract opened on a negative note and was trading at ₹26,052 levels. The contract has encountered a key short-term resistance at ₹26,100 in first week of January and is currently testing it once again. Moreover, the 200-day moving average hovering around this level and the 50 per cent Fibonacci retracement resistance level of prior downtrend are also poised around the same level of ₹26,100. The indicators in the daily chart have entered the positive territory.

The contract trades well above its 21 and 50-day moving averages. However, to alter the short-term downtrend that has been in place October, the contract needs to emphatically breakthrough the ₹26,100 levels. Such a breakthrough will strengthen the bullish momentum and accelerate the contract upwards to ₹26,400 and then to ₹26,800 in the near future. Traders with a short-term view can go long above ₹26,100 with a stop-loss at ₹25,700. Key supports to note are placed at ₹25,700, ₹25,500 and ₹25,200. On the global front, the spot gold price met with a key resistance at $1,110 per ounce and fell 1.4 per cent in the week ago to close at $1,088.7. On Monday, it was hovering around $1,090. Immediate support is at $1,080 and the next is placed at $1,060 levels. A strong rally above the immediate resistance level of $1,110 can take the gold price higher to $1,120 or even to $1,125.

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

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