India: Bullish prospects for MCX gold
Mumbai-India (Oct 12) The outlook for gold futures contract traded on the Multi Commodity Exchange (MCX) is bullish. Sharp rally in the global spot gold in the past week on the back of weak dollar has helped the domestic futures contract move higher. This is despite the rupee strengthening against the dollar.
The MCX-gold futures contract has surged over 3 per cent in the past week. It has also breached an important resistance at ₹26,700 per 10 gm and is currently trading at ₹26,850. A rise to ₹27,000 and ₹27,200 appears possible now. Further break above ₹27,200 will result in the contract extending its rally to the next targets at ₹27,450 and ₹27,700.
Traders with a short-term perspective can go long. Stop-loss can be placed at ₹26,350 for the target of ₹27,400. Intermediate dips to ₹26,700 and ₹26,500 can be used to accumulate long positions.
Immediate support for the contract is at ₹26,700. Next short-term support is in the ₹26,300-26,200 zone. A strong break below ₹26,200 is needed to turn the outlook to negative and take it lower to ₹26,000 and ₹25,700.
But such a sharp fall appears unlikely as the global spot gold prices, at $1,165/ounce, are trading strong. The spot price has risen past its important resistance at $1,150. It is likely to extend its rally to test $1,177 – the 200-day moving average resistance in the coming days.
A strong break above this hurdle will see the spot price moving further higher to $1,185 and $1,200.