The bulls say we saw the bottom in February. The bears say another decline is coming. Ignore the bulls and bears, since most of them completely ignore the message of the markets.
Any paper operation used to control the trend would most likely contract open interest. See chart below. Is there enough fuel to execute another attack? Yes, but as the chart also reveals the amount of paper available to fuel the decline has contracted sharply. This implies that any extension of the operation would produce a smaller decline going forward. For example, from November 2010 to February 2011 gold declined from $1421 to $1324 on an ample supply of paper contracts (fuel) held by weak hands. A sharp reduction in open interest as of June 21st means less fuel for an orchestrated decline.
Besides, the decline into the February lows produced a hard speculative flush. While double spec flushes are possible, they are far less common.
Gold London P.M Fixed (Gold) and the COT Futures and Options Open Interest Stochastic Weighted Average (WA)
Gold London P.M Fixed and the Commercial (C) & Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest
