Pressure is mounting on the gold futures contract traded on the Multi Commodity Exchange (MCX).
The contract has declined below an important support at Rs.25,000 per 10 gm on Monday and is currently trading at Rs.24,954.
The weak rupee has failed to lend support to the contract due to the sharp fall in the global gold price on Friday.
The outlook for the contract is bearish. A fall to test the next key support at Rs.24,500 is likely in the coming days.
Traders who have taken short position as per the advice given in this column last week can hold the position.
Keep the stop-loss at Rs.25,300 for the same target of Rs.24,550.
The contract will come under renewed pressure if it declines below Rs.24,450.
Such a fall will increase the danger of the contract extending its fall to Rs.24,000 and Rs.23,650.
On the other hand, if the contract manages to reverse higher from Rs.24,450, then a corrective rally to Rs.25,000 is possible.
On the global front, the spot gold price ($1,055/ounce) hovers above an important support at $1,050.
While this support holds, a range-bound movement between $1,050 and $1,065 is possible for some time. The downside pressure will ease only if the spot prices rise past ₹1,065 decisively.
On the other hand, the downside pressure will increase if the global gold price falls below $1,050. Next targets will be $1,040 and $1,030.
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