NEW YORK (TheStreet) -- Gold bulls had a rough start to the week as the yellow metal has been selling off due to the strength of the U.S. dollar and signs that Greece is nearing a deal with creditors.
For most of 2015, gold has been trading in a range around $1,200, struggling to find conviction to the upside or downside as fundamentals are trumped by speculation of an interest-rate hike and Greece's ability to pay debt.
It has mostly been more of a technical trade. Commodities are priced in U.S. dollars, so as the greenback moves higher, instruments like oil and gold generally move lower, and the inverse applies due to the strong correlation in the moves. Commodities move on other fundamentals such as supply and demand in addition to the U.S. dollar.
Gold looks weak, but there are not enough long holders to give that collapse down to the bigger support level of $1,164, said Tom Vitiello of Aurum Options Strategies. The pattern is more of a step-ladder type, and until gold breaks through the longer-term support level of $1,140, Vitiello said he doesn't expect panic selling.
Greece is another scenario where there may be more can-kicking, but Vitiello said interest-rate hikes are really the key. He said he expects more volatility to enter into the market because each Federal Open Market Committee meeting will now have three outcomes: raise; lower; or leave the same. Another indicator will be how much interest-rate hikes are priced into the gold market and what immediate direction to the upside or downside it will take, he said.
Vitiello said there is not that much interest in gold now because there is not much fear in the overall market, since traders are used to this type of news. From a technical perspective, Vitiello said he is looking at $1,164, and then $1,140, before getting involved on the short side and at $1,220 before participating to the long side.