COT report: Nearly half of managed money’s commodity exposure now in gold

Commodities

The Bloomberg Commodity Index (BCOM) extended its rally, rising 2.5% in the latest reporting week. Gains in energy and precious metals supported fresh buying and short covering, while agriculture broadly struggled—corn being the notable exception.

Managed money accounts responded by adding length across all energy and metal contracts, while fresh short selling weighed on the agriculture sector, most notably soybeans, sugar, and cotton.

Energy
Ahead of last Wednesday, when Reuters reported that eight OPEC+ producers were discussing another unexpected production increase, speculators had been strong net buyers of Brent crude on Russian supply disruption concerns. The net long jumped 22% to 251k lots, driven by a mix of new longs and short covering. WTI, by contrast, held an overall net short for a fourth week (CME and ICE combined), albeit slightly reduced.

The unexpected prospect of fresh OPEC+ supply wrong-footed Brent buyers and helped trigger a four-dollar correction into the week’s close. Prices have since rebounded from support near USD 65, after OPEC+ confirmed plans to revive another layer of halted production in October, but at a measured pace of just 137,000 barrels per day. The move underscores the group’s effort to regain market share and boost revenues, while the immediate impact remains limited as Iraq, Kazakhstan, and the UAE must fully compensate for overproduction since January 2024.

Metals
Silver’s break above USD 40 for the first time in 14 years, alongside gold’s fresh record high, lifted speculative net longs by 20% and 14% respectively. By nominal value, managed money accounts now hold 47% of their total commodity exposure in gold and 7% in silver. The heavy concentration in gold underscores the strength of a rally that has persisted for months, with only shallow corrections so far—insufficient to trigger broad long liquidation or force traders to await a fresh entry signal.

Copper net longs rose 25% as traders re-engaged, with reduced volatility and renewed price discovery drawing fresh interest after the tariff-driven pump-and-dump episode earlier this year.

Agriculture
Soybeans came under renewed selling and long liquidation amid weak Chinese demand, while corn benefited from short covering on the back of a smaller crop outlook ahead of Friday’s WASDE report. Wheat remains pressured by a robust global production outlook, weighing on nearby contracts relative to deferred and lifting the contango—adding to the positive roll yield of holding short positions.

Sugar shorts stayed elevated, while the cocoa net long dropped to a 2½-year low.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:

• They are likely to have tight stops and no underlying exposure that is being hedged
• This makes them most reactive to changes in fundamental or technical price developments
• It provides views about major trends but also helps to decipher when a reversal is looming

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.