India’s Multi Commodity Exchange (MCX) will launch the country’s first gold options contract in September allowing even smaller players in the bullion industry an instrument to hedge their risk, a senior company official told Reuters.

For years the market has been waiting for options. This will give many small jewellers an opportunity to hedge their risk without worrying about daily volatility.

India is the world’s second-biggest buyer of gold, typically importing around 800 tonnes a year, with the metal being used in everything from investment to religious donations and wedding gifts.

 

TECHNICAL ANALYSIS:

The monthly chart attached of MCX shows that price had been falling since November 2016. The fall in price got arrested at the Fibonacci cluster relationship made using various swings. All of which coincided around same levels of 990. Looking at the chart currently we see that price has held and sustained that for almost 4months now. Thus validating the strength of the supports and suggests arrest of the fall.

 

Now stepping down to lower time frame of weekly, we find that triangle pattern formations. There are 2 triangles. One large triangle shown by red line and smaller triangle shown by blue line. Price has broken above the larger triangle and post which is again forming a smaller triangle pattern. Thus price is getting coiled for a strong move. Also price is near 20% from the apex of the triangle which is an ideal breakout point. Thus if price breaks above the triangle around 1150 then it will lead to a strong move.

In that case one can look to buy the stock and also use dips around 1080-1050 to buy with stop below 990 and larger term target could be kept at 1500.

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