Prior to the release of important US economic data and an annual rebalance of commodities indexes, gold stabilized after falling by almost 1% during the previous session.
With passive tracking funds scheduled to start selling precious metals futures on Thursday in order to comply with the new weightings mandated by the indexes, bullion was close to $4,455 per ounce. Due to the explosive increases in gold and silver over the past year, sales are anticipated to be higher than normal.
Given its recent volatility, silver, which dropped 3.8% on Wednesday, is especially susceptible to a severe selloff. According to Citigroup Inc., the rebalancing might result in the sale of nearly $6.8 billion worth of silver futures, or roughly 12% of open interest on Comex.
Kenny Hu, a strategist at Citigroup, stated, "We haven't seen any outsized flow like this one in the many years I've been running this process."
The bank's projection is derived from funds that follow the S&P Goldman Sachs Commodity Index and the Bloomberg Commodity Index. Citigroup estimates that outflows from gold futures will be close behind those from silver, totaling about $6.8 billion.
With the help of central bank purchases and inflows to bullion-backed exchange-traded funds, gold and silver achieved a number of records last year, marking their greatest annual performances since 1979.
Gold, which is still up about 3% for the week, has received some support in recent days due to heightened geopolitical tensions surrounding China-Japan trade relations and the US detention of Venezuelan leader Nicolas Maduro.
The surge of silver, which increased by about 150% in 2025, has been even more remarkable than that of gold. By Wednesday's end, it had increased 7.4% only this week.
The market had a massive short squeeze in October, and worries that the US government would eventually impose import duties have also helped the white metal.
According to David Wilson, director of commodity strategy at BNP Paribas SA, the index rebalance may "dampen the potential upside in the near term, but in the longer run, silver has more momentum."
Additionally, traders are focusing on the December jobs report and other important US economic data that will be released on Friday.
A softer reading would encourage wagers that the Federal Reserve would slash interest rates more, which would be advantageous for non-yielding precious metals.
As of 9:34 a.m. Singapore time, gold has dropped 0.1% to $4,452.63 per ounce. Silver reached $78.72, up 0.7%. Palladium increased, and platinum also recovered some of its Wednesday losses. After closing the previous session up 0.1%, the Bloomberg Dollar Spot Index saw minimal movement.
