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By: Matt Simpson, Market Analyst
Futures positioning reveals a clear shift in market sentiment, with traders reducing exposure to metals as the US dollar regains strength. Gold and copper are under pressure amid signs of liquidation, while oil markets remain relatively stable despite escalating geopolitical risks. The latest Commitment of Traders (COT) data highlights a growing divergence across asset classes, with USD demand rising, metals weakening, and energy markets holding firm.
Source: CFTC (COT), LSEG
Source: CFTC (COT), LSEG
Futures traders flipped back to net-long US dollar exposure last week, with a $10.9 billion increase marking the fastest build since January 2019. Net-long positioning now sits at a 15-week high of $5.4 billion.
While positioning is not yet stretched, it signals a clear shift in sentiment back towards USD strength. Asset managers are now at their most bullish levels in a year, while large speculators have unwound a brief net-short phase.
From a macro perspective, this resurgence in dollar demand presents a headwind for metals, particularly gold, while offering underlying support for oil via the inflation channel.
Technically, the weekly chart shows a bearish inside week below 100, though this still looks like consolidation within a broader bullish structure. Dips may remain supported for a push towards 102.
Source: ICE, CFTC (COT), LSEG
I’ve regularly noted how reluctant futures traders were to fully embrace gold’s bull run. That scepticism made sense heading into the surge above $5000, when price action took on a more speculative, bubble-like quality. And to some extent, that caution has been vindicated with another bout of sharp volatility. Yet sentiment now appears to be shifting the other way — bears are also showing little appetite to step in.
While gross longs among large speculators and managed funds have gradually increased, they have not kept pace with the recent pullback in prices. Gold has now fallen for three consecutive weeks, with the latest move the most volatile, including a clear gap lower.
The fact that gold is declining alongside equities suggests a broader liquidation phase, where traders are raising cash rather than rotating into traditional safe havens. If that dynamic persists, it could see participation thin out on both sides of the market in the near term.
Source: COMEX, CFTC (COT), LSEG
I’ve had to throw in the towel on my long copper bias. For several weeks I’ve been looking for a swing low, on the basis that copper’s rally was far less stretched than silver or gold, while net-long exposure remained relatively elevated and well below sentiment extremes. But recent price action has clearly shifted momentum lower.
Gross longs are being reduced, although not aggressively, while shorts are creeping higher at a steady pace. It’s not capitulation, but it is enough to suggest bullish conviction is fading.
For now, this is a step aside. That bias could quickly change if geopolitical tensions ease, but until then, risks appear skewed to the downside.
Source: COMEX, CFTC (COT), LSEG
What stands out for Brent crude is its failure to break above the highs set when Israel and the US first struck Iran. Prices remain elevated and volatile, but volatility itself appears to be easing.
That suggests a relative calm in oil markets, despite ongoing conflict and renewed threats around the Strait of Hormuz. While crude has edged higher on the latest headlines, the reaction has been far more measured than many would expect given the backdrop.
Meanwhile, equities and gold are both falling as traders raise cash — yet oil’s muted response hints that energy markets may not be pricing in a meaningful escalation from here.
Positioning supports that view. Large speculators are maintaining gross longs at relatively high levels, but exposure was broadly unchanged on the week. Managed funds have edged shorts slightly higher, though they remain historically low.
In short, oil traders appear cautious but not fearful — a sharp contrast to the broader risk-off tone seen elsewhere.
Source: NYMEX, CFTC (COT), LSEG
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