NEW YORK ( TheStreet) -- Gold has failed to regain any traction to the upside, as it currently rests below $1,300 per ounce.
Mihir Dange, managing director at Grafite Capital, told TheStreet's Gregg Greenberg the nonfarm payrolls report for July released Friday temporarily sent gold higher but then gold failed to hold the $1,300 level and drifted lower.
Dange said he was concerned about gold's inability to follow through on a dismal report. If the nonfarm payrolls report can't be a catalyst, what will?
According to Dange, gold is trading almost purely on technicals at this point due to the slow summer trading season. However, if a large buyer were to initiate a position -- or a large seller were to liquidate one -- then gold prices could see some movement.He pointed to two important pivot prices: $1,275 and $1,325. Below the former, gold could see $1,225 and above the latter, gold could move up to $1,375. While the yellow metal appeared to be consolidating for another move higher, its refusal to surpass $1,300 is troublesome for bulls. As for banks in the commodities business, a sale would likely mean very little, assuming the unit actually sold. If it didn't sell, with banks such Morgan Stanley (MS) and JPMorgan Chase (JPM) looking to depart from commodities, a liquidation could move markets substantially. Dange said that if one of these firms had a large long or short position, the selling or covering of that position could drastically affect all commodities because of the low volume and their tendency to trade in tandem. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell