Aug. 21 (Bloomberg) -- Gold futures in Mumbai are poised to extend a rally from a two-year low to a record as an upward trend channel signals further gains, according to technical analysis by Kotak Commodities Services Ltd.
Futures on the Multi Commodity Exchange of India Ltd. may climb above the all-time high of 32,464 rupees ($514) per 10 grams reached in November in the next one month, said Dharmesh Bhatia, a Mumbai-based deputy vice president at the brokerage. “The price is currently in a strong uptrend forming higher tops and higher bottoms.”
Spot bullion in London rebounded 16 percent since reaching a 34-month low in June as demand for jewelry, bars and coins soared from India to China and Turkey. Prices in Mumbai have gained 24 percent since declining to a two-year low of 24,830 on June 28 as the rupee slumped to a record. The contract for October-delivery fell 0.4 percent to 30,705 rupees today.
“After creating a two-year low at 24,830 rupees, MCX gold has given a sharp pull back rally and closed last week above the upward sloping trend channel,” said Bhatia. “There is a strong psychological support seen at 30,000 rupees. There will be some consolidation over the next two to three days and prices will zoom to new highs once it breaches the 31,500 rupees level.”
A rising channel is a continuation pattern where prices show bullish signals along a channel marked by two parallel lines. The rising channel continues until the prices move to break through the upper or lower end of the channel accompanied by high volume. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes.
--Editors: Thomas Kutty Abraham, Ovais Subhani