Benchmark reweighting could drive selling
Gold and silver traded in a narrow range at the start of the year, following their strongest annual returns since 1979, as investors weighed the impact of an upcoming adjustment to a widely followed commodities benchmark, set to begin next week. Gold climbed on Friday before giving back much of the move later in the US session, while silver cooled after an earlier jump.
Some traders see support ahead if US interest rates keep falling and the US dollar weakens, but near-term flows could move the market in the opposite direction. As both metals have risen sharply, passive funds that track the index may need to cut positions to align with the new allocations.
Silver currently accounts for around 9% of the Bloomberg Commodities Index, versus a 2026 target of just under 4%. That implies more than $US5 billion in silver exposure may be reduced during the 5-day roll period starting next Thursday. Around $US6 billion of gold futures are also expected to be sold as part of the same process.
Thin holiday trade may amplify moves
TD Securities strategist Daniel Ghali said the scale of the adjustment could translate into selling equivalent to roughly 13% of total open interest in Comex silver futures over the next two weeks, raising the risk of a sharp pullback. With liquidity still light after the holidays, price swings could be exaggerated.
Gold’s rally through 2025 was supported by central-bank buying, a shift toward easier US monetary settings and a softer US dollar. Demand for defensive assets also increased amid geopolitical strains and trade uncertainty, although late-December trading was choppy as some investors locked in gains and momentum indicators suggested the market had run hard.
Gold was up 0.2% at $US4328.35 an ounce at 3:36pm in New York. Silver gained 1.3% to $US72.61 an ounce. Palladium and platinum also traded higher. Volumes remained subdued with several major markets, including Japan and China, still closed for holidays.