Gold and silver prices have steadied at the beginning of the year, following their best annual performances since 1979. Traders are closely watching the reweighting of a benchmark commodity index slated to begin next week. On Friday, gold initially surged as much as 1.9 per cent before paring gains during US trading hours, while silver briefly climbed 4 per cent before easing.
While some analysts predict a positive outlook for precious metals this year due to potential US interest-rate cuts and a weaker US dollar, there are concerns that a broad index rebalancing could put downward pressure on prices in the near term. The anticipated selling pressure stems from passive tracking funds adjusting their holdings to align with the new index weightings, following the metals’ recent rally.
Silver futures currently constitute 9 per cent of the Bloomberg Commodities Index, a widely followed benchmark. However, the target weighting is set to decrease to just under 4 per cent by 2026, potentially leading to the sale of over $US5 billion in silver holdings during the five-day roll period starting next Thursday. Approximately $US6 billion of gold futures are also expected to be sold. Daniel Ghali, a senior commodity strategist at TD Securities, anticipates a substantial 13 per cent reduction in aggregate open interest in Comex silver markets, potentially causing a dramatic price correction.
Last year, precious metals experienced a significant rally, although volatility increased in late December as investors took profits. Gold achieved a series of record highs in 2025, supported by central bank purchases, easing Federal Reserve policies, and a depreciating US dollar. Furthermore, demand for safe-haven assets, fuelled by geopolitical tensions and trade disputes, also contributed to the price surge. Recent trading saw gold rise 0.2 per cent to $US4,328.35 an ounce. Silver advanced 1.3 per cent to $US72.61 an ounce.
