Ole Hansen, Head of Commodity Strategy, Saxo Bank
Latest on gold following Friday’s slump
Gold has been trending lower since mid-April amid an energy-driven inflation scare. Following Friday’s stronger-than-expected US jobs report and a broader deterioration in risk sentiment that also weighed on equities, bullion closed below its 200-day moving average for the first time since October 2023.
For now, a combination of resilient economic growth, elevated inflation expectations, higher bond yields, a stronger dollar, and growing speculation that the Federal Reserve may need to raise rates in 2026 has created a challenging environment for gold, overshadowing longer-term supportive themes such as central bank buying, fiscal debt concerns, and geopolitical uncertainty.
Attention now turns to the USD 4,100–4,075 support zone, which marks both the March correction low and the 38.2% retracement of the 2022–2026 rally. On the upside, resistance may emerge at USD 4,432 (200-day moving average), USD 4,490 (recent high), and USD 4,635 (channel resistance).
Commodities
Returning to the latest COT report, the most notable development during the reporting week to 2 June, when the Bloomberg Commodity Index traded broadly unchanged, was continued and aggressive long liquidation across agriculture, led by the three major grain crops as well as sugar and lean hogs.
In energy, traders continued to position for a potential easing of the Middle East supply disruption, a development that could initially unleash a surge of supply from vessels currently trapped in the Persian Gulf. This expectation was most clearly reflected in Brent crude, where the net long fell to a four-month low of 253,000 contracts. WTI, meanwhile, continued to find support from persistent draws in US crude inventories.
In metals, a sharp reduction in gross short positions combined with fresh long buying left gold increasingly vulnerable to a technical setback once key support levels gave way. That vulnerability was exposed on Friday when bullion broke below its 200-day moving average and recorded its first close beneath the trend indicator since October 2023. Silver, platinum, and palladium attracted relatively limited interest during the week. In copper, meanwhile, tariff-related demand for COMEX futures helped lift the net long in HG copper to a more than five-year high, leaving the market exposed to profit-taking during the latest correction. Selling accelerated on Friday before buyers re-emerged ahead of key support around USD 6.15 per pound.
Agriculture experienced the most widespread liquidation. Since reaching a four-year high last month, the combined net long across 13 major agricultural futures contracts has almost halved, driven primarily by a two-thirds reduction in bullish positions across corn, soybeans, and wheat, led by corn. After reaching a two-and-a-half-year high last month, the Bloomberg Grains Index has fallen around 12% amid incoming harvest pressure on wheat and generally favourable US growing conditions that have improved production prospects for both corn and soybeans. The decline has undoubtedly been amplified by speculative long liquidation, particularly in corn and soybeans.
Elsewhere, the cocoa net short rose to its largest level since November 2022 at 21,000 contracts, while the Arabica coffee net long was reduced to a December 2023 low of just 12,000 contracts. Finally, lean hogs flipped to a net short position for the first time in two years.
Forex:
In FX, the week to 2 June showed little change at the aggregate level, with the gross long USD position against eight IMM currency futures holding steady at USD 16.6 billion as the dollar traded broadly unchanged.
Beneath the surface, however, notable rotation took place. Strong buying of the EUR, and to a lesser extent the CHF and GBP, was offset by continued selling of the JPY, AUD, and especially the CAD. As a result, the speculative net short in the Japanese yen climbed to a fresh 22-month high of 130,000 contracts, equivalent to around USD 10 billion, this despite repeated intervention warnings from Japanese authorities.
