NEW YORK ( TheStreet ) -- Gold prices wavered Monday on a mix of technical trading, fear buying and bargain hunting. Gold for February delivery closed down $1.20 at $1,596.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,611.50 and as low as $1,585.50 an ounce while the spot price was down $6, according to Kitco's gold index. Silver prices lost 79 cents to close at $28.87 an ounce while the U.S. dollar index was slightly higher at $80.26.
Gold started the day in positive territory after tanking 7% last week, but the rally fizzled as traders took profits at higher prices. George Gero, senior vice president attributed a portion of today's rally to short covering -- where traders buy back previously sold positions. "A closing price of $1,615 or better could trigger buy stops as momentum traders could notice improvement in open interest." This means that once gold breaks above that level, which it came close to today, traders could jump in and accelerate any move higher. GLD - Get Report) shed only 15 tons last week despite gold's violent move downward. It was a steep one-day drop, but the 1.1% move was in sharp contrast to a 7% move in the commodity price, meaning that there were those buying gold last week. The price of the ETF moves with the gold price but the ETF is only forced to sell tonnage when there are no buyers. Kobus Nell, analyst and assistant fund manager of Growth Investing at Stanlib, a South African investment firm, says he remains convinced of gold's up trend unless prices break below $1,540 an ounce. "Underlying demand for gold still seems to be strong and as long as global growth is off the cards, real yields will remain low and negative which should also be supportive with the underlying trend to increase liquidity." Nell says the short term players will be jittery but that maybe the greedy money is out of the system. Nick Barisheff, president of precious metals investment company Bullion Management Group, says that his clients and investors were buying gold on the way down last week. "When we have these kind of drops, we have had more purchases than redemptions." Barisheff thinks this correction was a major discount gift. Germany also sold almost 5 tons of gold in October. According to the Wall Street Journal, Germany's central bank sold the gold to the Ministry of Finance to mint commemorative coins. The gold then did not surface in the marketplace. Germany still holds more than 3,300 tons of gold, according to the World Gold Council. Official sector purchases, as they are called, have become a bullish factor for gold as the sector and any kind of reversal will be closely watched. Central bank purchases reached 148.4 tons in the third quarter according to the World Gold Council and could reach 450 tons by year's end. Gold mining stocks were struggling Monday. Kinross Gold ( KGC - Get Report) was shedding 2.77% at $11.76 while Yamana Gold ( AUY - Get Report) was down 0.35% at $14.15. Other gold stocks, Agnico-Eagle ( AEM - Get Report) and Eldorado Gold ( EGO - Get Report) were trading mixed at $36.62 and $13.12, respectively. Eldorado was getting particularly hit down more than 12% after buying European Goldfields for $2.5 billion Canadian dollars. Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel.