The gold futures contract traded on the Multi Commodity Exchange (MCX) fell 2.3 per cent in the previous week. After testing the key support at ₹25,000 per 10 gm, the contract moved higher. It currently trades at ₹25,150 levels. Both the medium and short-term trend is down for the contract. Also, it trades well below its 50 and 200-day moving averages. The indicators in the daily chart are on the brink of entering the bearish zone. An emphatic fall below the immediate support level of ₹25,000 will strengthen the downtrend and drag the contract down to ₹24,740 and then to ₹24,000 levels in the short term. Traders with a short-term view can consider initiating fresh short position only on a strong fall below ₹25,000 with a stop-loss at ₹25,250 levels.
The short-term trend remains in place as long as the contract trades below ₹26,000 levels. Immediate resistances are pegged at ₹25,500 and then at ₹25,700. An emphatic rally above these resistances can take the contract higher to ₹26,000 levels which will be a corrective rally. Next resistances above ₹26,000 are at ₹26,200 and ₹26,400.
On the global front, the spot gold price was volatile and fell 0.8 per cent in the prior week. It now trades at around $1,074 per ounce. A decisive rally above the immediate resistance at $1,085 can take the price higher to $1,100 levels. On the other hand, a strong plunge below the immediate support level of $1,051 can drag the gold price down to $1,040 levels in the short-term.
The recommendations are based on technical analysis. There is a risk of loss in trading.