The gold futures contract traded on the Multi Commodity Exchange (MCX) has been witnessing a corrective decline after hitting the key resistance at around ₹27,300 per 10 gm in mid-October. Following a volatile previous week, the contract closed on a negative note by declining 1.2 per cent. The contract has a significant long-term resistance in the range between ₹27,300 and ₹27,500 which needs to be decisively broken for a medium-term uptrend to ₹28,000 or ₹28,500 levels. On the other hand, it has a key support band in the zone between ₹25,800 and ₹26,000. Unless this support zone is emphatically breached the medium-term uptrend won’t be mitigated.

The contract on going decline tests a key immediate support at ₹26,500, the 200-day moving average also hovers around this level. It is trading around ₹26,495 per 10 gm. A strong plunge below this support will have bearish implication and drag the contract down to ₹26,200 and then to ₹26,000. Traders with a short-term perspective can initiate short position on such a fall with a stop-loss at ₹26,700. Key resistances to note are placed at ₹26,800 and ₹27,100.

On the global front, the spot gold price ($1,138/ounce) has tumbled almost 2 per cent breaching a key support at $1,160. It now tests next support at $1,140. A decisive fall can drag the gold price down to $1,120 or even down to $1,100 in the short term. Key resistances are at $1,160 and $1,180.

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

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