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India - gold to extend its rally

October 20, 2014

Mumbai-India (Oct 20)  The gold futures contract traded on the Multi Commodity Exchange has risen sharply above the psychological ₹27,000 per 10 gm resistance in the past week. Though the contract has come off after recording a high of ₹27,610 on Thursday it has significant supports at ₹27,150 and ₹27,000 which can limit the fall. Having said this, the short-term outlook will remain bullish as long as the contract trades above ₹27,000.  On the global front also the spot gold ($1,241/oz) looks bullish. Supports are at $1,225 and $1,200.

A rise to $1,255 and $1,275 looks likely in the coming week. As such the outlook remains bullish. A rise in the global gold price would limit the downside for the MCX-gold futures contract and push the domestic price also higher.

 As mentioned above, the outlook for MCX-gold futures contract is bullish. Resistances for the contract are at ₹27,500 and ₹27,700 – the 50 per cent Fibonacci retracement level. A strong break and daily close above ₹27,500 would add momentum to breach the next hurdle at ₹27,700 and rise to ₹28,000 in the coming days.

Traders with a short-term perspective can initiate fresh long position at current levels. Stop-loss can be placed at ₹26,950 for the target of ₹27,900. Intermediate dips to ₹27,150 and ₹27,000 if seen can be considered for accumulating more long positions.

The outlook for the MCX-gold futures contract would turn negative if the contract breaks below ₹27,000.The ensuing target of such a break will be ₹26,860 – the 21-day moving average support level.

Source: TheHinduBusiness

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