Quick Take: Producers Massively Selling Gold

The metal's current price level has triggered massive selling by producers, Aurum Options Strategies' Paul Sacks tells TheStreet's Joe Deaux.
By Bret Kenwell ,

NEW YORK (TheStreet) -- Although the summer action has begun to slow a bit, this week is sure to pack in the volatility for the gold market. Telling TheStreet's Joe Deaux what he's been seeing is Paul Sacks, principal gold trader at Aurum Options Strategies.

While gold prices have been quite range bound lately, Sacks has noticed some interesting price action after the recent break above the $1,300 resistance level.

He said that there has been massive selling by the gold miners over $1,300 because many of the companies did not sell or hedge the price of gold when it was making new highs last year.

The important thing that many traders are watching now is whether gold will be able to break out over $1,350, or if it will slip below $1,300.

Giving aid to either move will likely be what happens at the

Federal Reserve's

FOMC meeting scheduled for Wednesday morning.

Sacks said that he expects the Fed to remain accommodative, keeping the current level of buying $85 billion a month in mortgage-backed securities.

He added that the nonfarm payrolls report on Friday will also be meaningful to the prices of gold. Since the labor market is essentially the measuring stick for the recovery -- and the recovery going forward -- Sacks said he expects movement from gold on Friday.

-- Written by Bret Kenwell in Petoskey, Mich.

Follow @BretKenwell

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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