By: Matt Simpson, Market Analyst
Futures positioning across precious metals and crude oil is sending mixed signals. While gold and silver are attempting to stabilise after a recent pullback and copper continues to trend higher, COT data suggests that conviction among large speculators and asset managers remains limited. This divergence between price action and positioning raises questions over the durability of recent moves, particularly in metals, while oil markets remain more sensitive to geopolitical risk and supply constraints.
Source: CFTC (COT), NYMEX, COMMEX, ICE, LSEG
Source: CFTC (COT), NYMEX, COMMEX, ICE, LSEG
The Brent crude oil market arguably provides one of the clearest reads on how “well” relations between the US and Iran are evolving. While equity markets have adopted a more risk-on tone—on hopes that the worst of the conflict may be behind us—the oil market appears far less optimistic, with Brent holding around the $100 level and refusing to sell off materially.
There is little reason for a sustained decline while the Strait of Hormuz remains a key risk. As long as this critical chokepoint is under threat, it seems likely that price action will remain choppy and volatile around current levels, with Iran effectively holding influence over roughly 20% of global oil supply.
Large speculators increased their net-long exposure by 8.2k contracts last week. This was driven primarily by a reduction in short positions (-8.2k contracts), resulting in a total net-short reduction of 16.3k contracts. With net positioning now at just -9.2k contracts, there is a strong likelihood that positioning could flip to net-long in the next COT report—unless there is a surprise breakthrough in US-Iran relations. At this stage, that appears unlikely.
A similar, though more muted, pattern was observed among managed money accounts. Net-long exposure increased by 3.2k contracts to 17k, with long positions rising by 1.2k and short positions falling by 2k.
Source: NYMEX, CFTC (COT), LSEG
Momentum is turning higher for gold and silver following a two-week selloff, while copper continues to push higher and looks set to challenge a break above 6.5.
However, futures positioning does not fully support these moves. This raises the question of whether gains in gold and silver may be capped, or whether positioning data has become a less reliable indicator than earlier this year.
There is growing anecdotal evidence that some crypto traders have rotated into gold. This could help explain the divergence seen over the past 18 months, where gold prices continued to rise while bullish positioning lagged—even as prices pushed to record highs above 5,000. The volatility profile has also, at times, resembled that seen in bitcoin.
Net-long exposure to silver futures among managed funds has been trending higher alongside prices, although the pace has been relatively modest. A similar pattern is evident in copper, where net-long exposure is also gradually increasing.
Overall, this may point to a combination of lower participation from managed funds and large speculators, reducing the strength of signals derived from COT data. While positioning remains a useful indicator, it may not be fully capturing recent price dynamics.
That said, the flip side is that gold and silver could be vulnerable to a pullback if weaker hands are shaken out during another risk-off phase.
Source: COMEX, CFTC (COT), LSEG
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