India: Near-term outlook is bearish for MCX gold
New Delhi-India (Mar 21) Since encountering a key resistance at around ₹30,000 per 10 gm in early February, the gold futures contract traded on the Multi Commodity Exchange has been on a sideways consolidation in the band between ₹28,500 and ₹30,000. Within this band, the contract fell 1.3 per cent or ₹369 to close ₹29,131 last week. The level of ₹29,000 was then providing support.
But, on Monday, the contract breached this support by declining ₹245 or 0.8 per cent. It is currently hovering at ₹28,886. The near-term bias is negative. The possibility is high of breaking the lower boundary of the sideways range. The contract has decisively breached its 21-day moving average and is heading towards to lower end. The indicators in the daily chart such as relative strength index and price rate of change are showing negative divergence backing the bearish view.
Traders with a short-term perspective can make use of rallies to initiate fresh short position while maintaining a stop-loss at ₹29,500. A conclusive fall below ₹28,500 can drag the contract down to ₹28,000 and then to ₹27,500 in the short term. Traders can consider accumulating their short position on a decisive fall below ₹28,500.
On the other hand, strong rally above ₹29,500 can alter the bearish outlook and take the contract up to ₹30,000. An emphatic break through of ₹30,000 is needed to strengthen the uptrend and take the contractto ₹30,500 and ₹31,000.
On the global front, the spot gold closed marginally on a positive note at $1,254.6/ounce last week. On Monday, it slipped to $1,244. The immediate resistance is at $1,280 and support is at $1,233. A decisive fall below $1,233 can pull the price down to $1,220 or 1,200. Significant resistances beyond $1,280 are at 1,300 and 1,320.
Note: The recommendations are based on technical analysis. There is a risk of loss in trading.