Quarterly Outlook
Q1 Outlook for Traders: Five Big Questions and Three Grey Swans.
John J. Hardy
Global Head of Macro Strategy
Strap yourself in for key market questions that must be answered in 2026.
Faced with increasingly challenging trading conditions, managed-money accounts—having already been selling into the rally for several weeks amid rising volatility, higher exchange margins, and tightening VAR constraints—accelerated their deleveraging. Gold net longs were cut by 23% to 93,438 contracts, the lowest level since October; silver net longs fell 38% to a 23-month low of just 4,491 contracts; and platinum positioning was reduced by 42% to near-neutral at 1,083 contracts.
With the exception of gold, both long and short positions were reduced, highlighting an absence of appetite for fresh short selling into the slump and instead pointing to broad risk reduction.
HG copper’s surge to a record high, followed by a sharp 15.5% peak-to-trough correction, still left the contract up 3.8% on the week, albeit with heightened volatility prompting a reduction in both long and short positions.
Beyond metals, the week saw broad-based buying across crude oil and refined products, with the combined crude oil net long rising by 65.4k contracts to 341.3k—a six-month high and a marked rebound from near-flat positioning at the start of the year. Brent has settled into a wide USD 10 trading range, with recent, and so far unsuccessful, attempts to break above USD 70 largely driven by Iran-related supply disruption risks amid increased US military presence in the Middle East and renewed political rhetoric. The combination of elevated speculative length and a fading focus on Iran raises the risk of the narrative shifting back toward oversupply, potentially pulling prices back toward USD 60.
In agriculture, the grains sector recorded net buying across all three major crops, while soft commodities remained under pressure, led by heavy net selling in sugar and coffee. Livestock continues to stand out as the most favoured agricultural sector, with speculators holding a combined net long across the three contracts valued at approximately USD 19 billion.