COT Report: Analysis & News
- Gold Buying Persists
- Oil Bulls at 13-Month High, However, Eyes on Geopolitics
- Copper Risks Topping Out
The Predictive Power of the CoT Report
Gold: The precious metal ended the year on a positive note as speculators continued to demand gold, having raised their long positions by 8%, while shorts were little changed. As we have mentioned previously, seasonal factors are typically positive for gold in January, gaining on average 3.2% in January over the past 10-years (only August has seen a better 10-year average at 3.9%). This year has been no different with the precious metal rising 3.3% so far this month amid the increased geopolitical tensions in the middle east. Elsewhere, investors boosted their silver net longs by 11%, marking the largest bullish bet since September.
Oil: Prior to the rise in tensions between the US and Iran, which briefly took Brent crude oil futures above $70/bbl. Investors had been increasingly bullish on the energy market with net longs in Brent crude oil rising to a 13-month high. However, while geopolitical risks can lead to sharp spikes in oil prices, they can be somewhat short-lived given the oil markets ability to be somewhat flexible as evidenced by the September Saudi Arabian oil facility attacks.
Copper: Net longs in the industrial metal grew slightly as funds marginally cut back on their short positions by 1%. However, copper could be starting to top out as investors refrain from taking up fresh longs. As such, copper is likely to take its cue from the risk environment, therefore a pullback in equity markets from its relatively lofty levels is likely to weigh.
Current Positions
Source: CFTC, DailyFX (Covers up to December 31st, released January 6th)
Oil
Gold
Silver
Copper
*Long & Short positions are adjusted for open interest
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
