URGENT UPDATE: Hedge funds are making decisive moves away from precious metals as gold and silver prices plummet. Just confirmed data shows that before the crash, hedge funds had already reduced their exposure to metals, pivoting towards energy amid escalating market volatility.
As of 12:56 a.m. ET on Tuesday, spot gold is trading at approximately $4,829 per troy ounce—over 10% lower than its record high of more than $5,500 reached just last week. Meanwhile, silver has dropped to around $83.40 per ounce, more than 30% below its peak of over $121 per ounce. This dramatic downturn has left investors reeling.
According to the latest data from the Commodity Futures Trading Commission, hedge funds have been reallocating investments away from gold, silver, and platinum as they cut long positions in response to rising volatility. Ole Hansen, head of commodity strategy at Saxo Bank, detailed in a recent analysis that these trends reflect a strategic shift from precious metals to energy markets.
With the price of US West Texas Intermediate crude oil futures now around $62 per barrel—an 8% increase this year—hedge funds are capitalizing on opportunities in energy as fears of supply disruptions loom due to geopolitical tensions in regions like Venezuela and Iran.
The significant pullback in silver positions has left funds with “plenty of room” to re-enter the trade once volatility stabilizes, Hansen noted. However, investors should remain cautious, as the recovery could take time following Friday’s market meltdown.
Warnings from analysts highlight that while the fundamental drivers for precious metals remain—such as ongoing geopolitical tensions and central bank acquisitions—the recent correction serves as a cautionary signal for momentum traders and those driven by fear of missing out (FOMO). “When gold and silver become hot topics of conversation, it often indicates that a rally phase is nearing exhaustion,” Hansen stated.
This situation is unfolding rapidly, and the shifts in hedge fund strategies underscore a broader trend in market dynamics. Investors are urged to stay alert as volatility continues to impact precious metal prices, with analysts closely monitoring the situation for potential recovery signals.
As the situation develops, those invested in precious metals or energy markets should remain vigilant. The interplay of market forces is expected to generate further shifts, making this a critical period for both sectors.
Stay tuned for updates as this situation evolves and impacts the global financial landscape.
