Gold Might Be Gearing Up For A Fresh Rally

Silver too seems to have resumed a bull trend

- Akhil Nallamuthu

MCX COMDEX, the composite commodity index of the Multi Commodity Exchange (MCX), depreciated following a drop in the price of its major components — crude oil and gold.

Although gold looks set to rally, the upside for the index might be limited because of the weakness in crude oil price.

The latter is the largest component in the index with around 33 per cent weight. The index could have a bearish bias going forward.

MCX-Crude (₹4,162)

The February futures contract of crude oil dropped during the first half of last week, but recovered some of its losses. However, the weakness persists and the likelihood of a further decline is more. The contract has slipped below the support at ₹4,210 and the 50-day moving average, potentially turning the medium-term trend negative.

The daily relative strength index (RSI) is on a downward path and stays below the midpoint level of 50. The moving average convergence divergence indicator in the daily chart, too, hints at more weakness, as it stays in the negative region.

Thus, traders can take a bearish view and make use of the rallies to go short in the futures contract with a stop-loss at ₹4,315. The contract will find support at ₹4,022, below which it might depreciate to ₹3,780.