Commitments of Traders data showed an unusual configuration in silver in 2018, when Commercials shifted to a net-long stance despite typically being net short as producers and other physical-market participants hedge via futures and options. Silver was trading around $14\u2013$15 an ounce while average mining costs were estimated at about $17, a backdrop that helped explain reduced incentives to lock in future sales at depressed prices. The positioning change coincided with a major low, and similar net-long Commercial episodes were also seen near lows in 2019 and 2022. Gold also registered a bullish COT setup around the 2018 low, but the silver signal was rarer because Gold Commercials have been net long at other points in the available history.<\/p>\n\n
A broader composite gauge, COTbase, aggregates positioning across gold, silver, copper, platinum and palladium, and it is currently in bearish territory with a larger-than-average bearish extreme. Copper is also described as being at an all-time COT extreme, a condition that can persist for weeks or even months before price responds. The framework presented treats such extremes as market-structure context rather than timing tools, with attention focused on whether positioning shifts align with underlying hedging behaviour.<\/p>\n\n
We believe derivative traders should exercise extreme caution over the coming weeks as precious metals sit near highly stretched levels. Looking at recent market data from September 2026, gold continues to trade at elevated levels above $2,600 an ounce, while silver remains volatile near $31. However, the underlying market structure reveals that commercial hedgers have accumulated massive net-short positions, signaling that this multi-month rally may be running out of steam.<\/p>\n\n
Historically, we have seen that when commercial traders\u2014the producers and physical players\u2014go heavily net-short, it often precedes a significant market cooling. For instance, in the silver market, commercial net-short contracts have expanded rapidly, mirroring the crowded setups that historically triggered price pullbacks. We advise traders to avoid blindly chasing late-stage breakouts in gold and silver, as the broader precious metals complex is flashing warning signs of being overextended.<\/p>\n\n
Copper presents a similar picture of extreme positioning that demands patience from market participants. Even though copper prices have shown resilience due to ongoing global demand, commercial net positions have reached historic extremes. We suggest derivative traders wait for clear price confirmation rather than rushing into counter-trend positions, as these structural imbalances can persist for several weeks before a correction begins. <\/p>\n\n
By analyzing these Commitments of Traders (COT) figures, we can see how the physical market is reacting to current high prices. Producers are aggressively hedging and locking in their selling prices, which naturally puts a cap on how much higher these metals can realistically run in the near term. We should focus on managing risk and protecting capital, rather than assuming the recent upward momentum will continue uninterrupted.<\/p>\n\n\n\n