Gold Buying Persists, Oil Longs Extended, Copper Risks Topping Out - COT Report

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