Gold Continues To Move Sideways

February contract of the yellow metal oscillates between ₹37,500 and ₹38,950

- Akhil Nallamuthu

MCX COMDEX, the composite commodity index of the Multi Commodity Exchange of India (MCX), at 3,846, declined in the past week. This was due to a weak crude oil price, the index’s largest component with 33.2 per cent weight.

MCX-Crude (₹3,980)

The December futures contract of crude oil had been moving in a sideways trend for most part of the last week. Unable to crack the resistance at ₹4,200, the contract declined on Friday and closed the week at ₹3,980. This level also coincides with the 50-day moving average, from where the contract took support and bounced two weeks ago.

Thus, the contract seems to form a range between ₹3,980 and ₹4,200, and unless it moves away from this range, the next leg of the trend is less likely to be established. There is a down-tick in the daily relative strength index (RSI), and the moving average convergence divergence, too, shows weakness.

If the contract breaks below ₹3,980, it has immediate support at ₹3,870. Below that, the contract might weaken to ₹3,700 over the medium term. On the upside, the resistance beyond ₹4,200 is at ₹4,314.

MCX-Gold (₹38,004)