Commodity benchmark indices are about to be "reset," facing the risk of sell-off; gold and silver surge at the start of the year but then fall back.

Gold and silver opened high and closed low on the first trading day of the year as traders assessed the potential market impact of upcoming commodity benchmark index weight adjustments set to start next week. Gold and silver just finished the best annual rally since 1979, but are about to face heavy passive fund selling pressure. On Friday, January 2, during trading, gold rose as much as 1.9%, but gave back most of its gains during U.S. hours to close up only 0.2% at $4,328.35 per ounce. Silver’s early session gains reached as much as 4%, then fell back to 1.3%, closing at $72.61 per ounce. Analysis indicates that although traders expect further Fed rate cuts and a weaker dollar to support precious metals’ continued rise this year, the imminent index rebalancing may put pressure on prices. It is reported that **the annual reweighting of the Bloomberg Commodity Index will result in more than $6 billion in gold futures and over $5 billion in silver futures being sold during a five-day rollover window (January 8th–14th).** TD Securities’ Senior Commodity Strategist Daniel Ghali warned that **in the next two weeks, the equivalent of 13% of all open interest in the Comex silver market will be sold, “which will trigger a significant downward repricing.” He noted that post-holiday low liquidity could exacerbate price swings.** ## Unprecedented size of index adjustments The Bloomberg Commodity Index is widely used as a commodity investment benchmark, with total assets tracking the index near $109 billion as of last October. This reweighting involves a huge amount of capital. According to Bloomberg, silver futures currently account for 9% of the index’s weight, but the 2026 target weight is just under 4%, **meaning that over $5 billion in positions will need to be liquidated within the five-day rollover starting next Thursday (January 8th). Gold futures are expected to see about $6 billion sold.** According to Chase Trading Desk, a JPMorgan research report published December 12th quantified the scale of selling: **silver will face the heaviest selling, with sell orders accounting for about 9% of total open interest in the futures market. The report particularly highlighted that this year's selling pressure for silver is “more pronounced than last year.”** Gold’s selling is expected to amount to about 3% of total open interest. JPMorgan’s report also pointed out that for gold investors, the upcoming January will see an intense battle between bullish and bearish factors. > On one hand, the report reaffirmed gold’s traditional strong seasonal pattern from year-end into the beginning of the following year. Data show that in the last ten years, gold prices rose an average of 4.6% during each year’s last 10 trading days through the first 20 trading days of the next year, with an 80% probability (eight out of ten times). This “holiday buying” effect often transmits to silver and platinum as well. > > On the other hand, the major technical selling triggered by index rebalancing will directly offset this seasonal tailwind. The report cautioned that although last year's similar index selling did not stop the seasonal uptrend, given the clearly larger selling pressure in silver this year, investors should closely watch whether this variable disrupts historic patterns. ## Investment banks bullish on gold in the long term Despite the short-term technical pressures, major investment banks continue to support further gains in gold prices this year, especially as the Fed is expected to cut rates further and Trump is reshaping the Fed’s leadership. **Goldman Sachs said last month its baseline forecast is for gold to rise to $4,900 per ounce, with further upside potential.** Gold, silver, and other precious metals registered strong gains last year, despite sharp fluctuations in late December as some investors took profits and technical indicators showed overbought conditions. Gold hit multiple record highs in 2025, supported by central bank purchases, Fed policy easing, and dollar weakness. Geopolitical tensions and trade friction have also driven safe-haven demand for gold. Silver’s gains last year even outpaced gold, breaking through levels that only the most optimistic market observers thought possible. In addition to factors supporting gold, silver also benefited from ongoing market concerns that the U.S. government may eventually impose import tariffs on refined metals. Risk Warning and Disclaimer The market involves risk; investment should be cautious. This article does not constitute personal investment advice and has not taken into account the individual investment objectives, financial situation, or needs of any specific user. Users should consider whether any opinions, views, or conclusions expressed in this article are applicable to their own circumstances. Investing accordingly is your own responsibility.