URGENT UPDATE: Hedge funds have dramatically shifted their positions away from gold and silver just prior to a stunning market collapse. Positioning data reveals a significant rotation out of precious metals and into energy, as volatility surged, contributing to a sharp decline in prices.
As of 12:56 a.m. ET today, spot gold was trading at approximately $4,829 per troy ounce, more than 10% lower than its recent peak of over $5,500 per ounce reached last week. Meanwhile, silver plummeted to around $83.40 per ounce, over 30% below its record high of $121 per ounce.
The Commodity Futures Trading Commission (CFTC) released its weekly Commitments of Traders report, highlighting this critical shift as hedge funds reduced their long exposure in gold, silver, and platinum amidst a sharp rise in market volatility. Ole Hansen, head of commodity strategy at Saxo Bank, indicated that this trend reflects a growing caution among investors.
As hedge funds pulled back, capital was reallocated into energy markets, particularly as oil prices started to rise due to fears of supply disruptions linked to geopolitical tensions, including the Trump administration’s actions in Venezuela and escalating issues with Iran. Currently, US West Texas Intermediate crude oil futures are trading around $62 per barrel, marking an 8% increase this year.
The report also noted that long positions in crude oil futures have reached their highest levels since August, while net long silver positions have dropped to a two-year low. Hansen emphasized that this swift pullback in silver positions gives funds “plenty of room” to re-enter the trade once market volatility stabilizes, although he cautioned that this recovery may take time following the recent sell-off.
The sudden unraveling of silver prices has raised alarm bells among analysts. Jeffrey Christian, a commodities expert, pointed out that the previous rally was not driven by traditional long-term investors but rather by speculative trading. He explained that extreme trading volumes across futures, options, and ETFs amplified the market’s reaction, leading to a significant correction.
Despite the correction, the fundamentals supporting gold and silver—such as geopolitical uncertainty and central bank purchases—remain strong. However, Hansen advised caution, suggesting that the recent price drop serves as a warning for momentum and FOMO (fear of missing out) traders. He noted, “When gold and silver turn into hot topics at dinner tables and workplaces, it is often a sign that a particular phase of the rally is nearing exhaustion.”
Investors and market watchers are advised to stay tuned for further developments in the precious metals market as the situation continues to evolve.
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