- Ole Hansen, Head of Commodity Strategy, Saxo Bank
Forex:
COT on forex covering the week to 29 April showed that, despite some emerging USD strength, the dollar-selling theme remained intact, with speculators lifting the gross USD short versus eight IMM futures to an eight-month high of USD 17.1 billion. While selling was broad, the main driver was renewed EURUSD buying, which increased the EUR net long by 10,769 contracts (USD 1.5 billion equivalent) to 75,769 contracts (USD 10.8 billion). However, the largest long against the greenback remains the JPY, after another week of light buying lifted the net long to a fresh all-time high of 179,000 contracts (USD 15.8 billion equivalent).
Commodities:
During the reporting week ending 29 April, commodity markets faced another challenging period marked by mixed performance both within and across sectors. This volatility often led to position changes that didn’t necessarily align with the direction of individual commodity prices. The Bloomberg Commodity Index recorded a marginal loss overall, with weakness in energy, precious metals, and grains partially offset by strength in industrial metals, livestock, and, notably, soft commodities.
On the positioning front, selling pressure was concentrated in Brent crude, natural gas, gold, corn, wheat, and sugar. Meanwhile, buying interest emerged in WTI crude, silver, platinum, copper, coffee, and cotton.
Crude Oil: Long Positions Cut Amid OPEC+ Output Expansion
Speculators trimmed long positions in crude oil ahead of the latest OPEC+ production increase. Both Brent crude and WTI fell back toward the four-year lows last seen in the aftermath of the March sell-off triggered by President Trump’s so-called “Liberation Speech.” The drop followed OPEC+’s decision to extend the 411,000 barrels-per-day production increase planned for May into June. This move raised concerns about a potential global supply glut, especially at a time when trade tensions threaten to dampen demand.
Saudi Arabia has hinted at the possibility of further monthly increases, citing frustration over persistent overproduction from member countries such as Kazakhstan, Iraq, and the UAE. The resulting price decline appears, for now, to have aligned Saudi interests more closely with those of the U.S.—specifically with President Trump—than with Russia, a key member of the OPEC+ group of producers. At the same time, the strategy may serve to discipline U.S. shale production, which faces headwinds in ramping up further and may even begin to roll over, if current low prices are being maintained in the coming months. This potential reduction in shale output could offer medium-term support for both crude oil and not least U.S. natural gas, as the supply of associated gas from shale wells diminishes.
Ahead of the weekend announcement, managed money long positions in crude oil declined by 15,700 contracts to 226,500—well below the five-year average of 426,000 and the one-year average of 272,000. This suggests that choppy price action, the loss of momentum, and continued macro-driven selling are weighing on speculative interest.
Gold: Net Long Positions Drop to 14-Month Low Despite Underlying Strength
COMEX gold futures suffered a second consecutive weekly loss, continuing their correction from the all-time high of USD 3,500 reached last month. This weakness triggered a sixth straight weekly reduction in the net long held by managed money accounts, which fell to a 14-month low of just 116,000 contracts, a 55% from last September, when gold traded around USD 2,650.
However, despite the consistent selling pressure by Western speculative investors, gold has managed to stage a resilient performance overall. To understand this, one must look eastward—particularly at China’s role in driving demand. Chinese investors have in recent months become a dominant force in the market, primarily through local gold-backed ETFs, which have already exceeded their total 2024 inflows.
Persistent domestic demand—driven largely by retail investors—reflects growing economic concerns within China and uncertainties surrounding long-term U.S.–China relations. Last week’s dip in prices to around USD 3,200 occurred during the Chinese Labour Day holiday (through May 5), a period in which ETF inflows temporarily paused. As the Chinese market reopens on May 6, investor response will provide a crucial short-term signal for gold’s next move.
