UPDATE: Hedge funds have swiftly shifted their investments away from precious metals just before a dramatic crash in gold and silver prices. Positioning data reveals that these funds were already reallocating capital into energy markets as volatility surged, underscoring a significant market shift that has implications for investors worldwide.
As of 12:56 a.m. ET on January 26, 2026, spot gold is trading at approximately $4,829 per troy ounce — over 10% off its recent record high above $5,500. Meanwhile, spot silver has plummeted to around $83.40 per ounce, more than 30% lower than its peak of over $121. This sudden downturn has sent shockwaves through global markets, but hedge funds were already anticipating the collapse.
According to the latest data from the Commodity Futures Trading Commission’s weekly Commitments of Traders report, hedge funds actively reduced their long positions in gold, silver, and platinum amid rising market volatility. Ole Hansen, head of commodity strategy at Saxo Bank, noted in his analysis that this rotation out of metals was evident before the recent sell-off.
Investors are now reallocating funds into energy markets, where oil prices have seen a recent uptick. US West Texas Intermediate crude oil futures have risen to around $62 per barrel, marking an 8% increase this year. This shift comes in response to fears of supply disruptions linked to geopolitical tensions, particularly following the Trump administration’s raid on Venezuela and severe winter storms impacting the US.
The reduction in silver investments is particularly striking, with net long positions falling to a two-year low. Hansen highlights that this heavy pullback leaves funds with “plenty of room” to re-enter silver trades once market conditions stabilize. However, he cautions that this normalization process may take time following the recent market meltdown.
The rapid decline in precious metals prices was not entirely unexpected. Analysts had previously warned that the blistering rally—particularly in silver—was driven by speculative trading rather than traditional long-term investment strategies. Jeffrey Christian, a veteran commodities analyst, explained that extreme trading volumes across futures, options, and ETFs had strained market mechanics, leading to the current situation.
Hansen added that despite the recent corrections, the fundamental drivers for precious metals remain in place, including persistent geopolitical tensions and ongoing central bank purchases. However, he warns that for momentum traders, the current pullback signals a potential exhaustion phase for this rally.
As gold and silver become hot topics of discussion, investors should remain vigilant. The latest market developments emphasize the importance of strategic positioning and the unpredictable nature of commodity trading.
For those interested in real-time updates, stay connected to the latest gold and silver prices and market insights. The situation continues to evolve, and the next moves from hedge funds could significantly impact the precious metals market.
Stay tuned for more urgent updates as this story develops.
