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Gold futures contract on MCX surged over 2 per cent last month. However, the 200-day moving average at ₹29,786 halted the rally and the contract has reversed sharply lower from there. The sharp 2 per cent fall last week has wiped almost all the gains made last month, suggesting that the contract is on a corrective fall. Next key supports are at ₹28,750 and ₹28,500 which are likely to be tested in the coming days. The presence of the 21-week moving average and a trendline in the ₹28,750-₹28,500 region makes this zone a strong support. So a break below ₹28,500 looks less probable. A subsequent reversal from ₹28,500 can take the contract higher to ₹29,500 and ₹29,750 levels once again. Traders with a medium-term perspective can buy on dips near ₹28,750. Accumulate longs near ₹28,500. Keep the stop-loss at ₹28,250 for the target of ₹29,700. The contract will need a strong break and a decisive close above the 200-day moving average resistance to gain fresh momentum. In such a scenario, the contract can witness a fresh rally to ₹30,500 or ₹30,700 thereafter.
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