A quick review of the COT money flows reveal that connected interests may have had their feet placed on the fire this week in terms of trend control. Connected money, populated by the infamous bullion banks, has used futures and options, i.e. paper markets, to control gold rate of appreciate for years. A typical money flow setup, referred to as paper operations here, illustrates how commercial traders use short-side concentration to contain gold rallies during speculative upside bursts.
Source: edegrootinsights.blogspot.com
Robert Palmer, Andy Taylor, and John Taylor of the Power Station once suggested that Some Like It Hot. Connected money's feet (net positions) remain on the fire; The temperature of the fire is rising.
The following chart illustrate a classic short squeeze into strength.
Gold London P.M Fixed and the Commercial (C) Less Nonreportables (NR) Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest
Normally, short positions are reduced into weakness (blue arrows) rather than strength (green arrows).
Gold London P.M Fixed and the Commercial Traders COT Futures and Options ZScore Weighted Average of Long & Short As A % of Open Interest
