The immediate outlook for the gold futures contract traded on the Multi Commodity Exchange (MCX) is not clear. Weak rupee is offsetting the fall in the global gold price. As a result, the domestic futures contract is currently trading near ₹26,850/10 gram and has been stuck in a narrow range between ₹26,750 and ₹27,100 for about a week now.

A breakout on either side of this range will decide the next leg of move for the contract. Traders can stay out of the market until a clear trade signal emerges.

The possibility looks high for the contract to break above ₹27,100 and move higher in the coming days. The Indian rupee closed on a weak note on Monday -- at 64.17 – and is signalling a further fall. A weak currency could help in limiting the downside for the futures contract. The futures contract can sustain higher above ₹26,750. A break above ₹27,100 can take the contract higher to ₹27,650 and then to ₹28,000.

Traders with high risk appetite can go long. Stop-loss can be kept at ₹26,650 for the target of ₹27,450. The bullish outlook will get negated if the contract records a decisive close below ₹26,750. The next immediate targets are ₹26,500 and ₹26,350. It will also keep the contract pressured to test its key supports at ₹26,000 and ₹25,750. On the global front, the spot gold ($1,180/ounce) is getting support at $1,170. Though the overall trend is down, an intermediate rise to test the resistances at $1,190 and $1,195 is possible. Such a rise can aid the rise in domestic futures contract prices.

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