The sharp fall in gold futures traded on the Multi Commodity Exchange (MCX) from the high of ₹27,279/10 gm halted at a low ₹26,490 on Friday.
The contract has reversed higher from this low and is currently trading near ₹26,720.
Support is at ₹26,400 and there is a strong likelihood of a rise to test ₹27,000 in the coming days.
A strong break above ₹27,000 can take the contract further higher to ₹27,400.
Traders with a short-term perspective can go long.
Stop-loss can be placed at ₹26,300 for the target of ₹27,300.
Any intermediate dips to test the support at ₹26,400 can be considered to accumulate long position.
The contract will come under pressure if it declines below the support at ₹26,400.
The ensuing target on such a fall will be ₹26,000. On the global front, the spot gold ($1,182/ounce) fell to a low of $1,169 and has reversed higher from there. Support is at $1,173.
There is no immediate danger for further fall as long as the yellow metal manages to sustain above this support level.
As such, a short-term rise to $1,200 and $1,205 once again cannot be ruled out.
Such a rise in the global spot price can push the contract also higher since the domestic price moves in tandem with the global price.
The outlook will turn negative if gold records a strong close below $1,173.
In such a scenario, gold can fall to $1,150.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.
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