Huatai: Index weight adjustment has caused short-term technical disturbances in gold and silver, and the pressure for passive placement of silver may be stronger than that of gold.

# Li Bin, Huatai Securities 

Huatai Securities stated that precious metals are significantly overweight in the funds passively tracking the Bloomberg Commodity Index (BCOM). Passive funds that track this index will be forced to sell their gold and silver futures positions during the rebalancing period. Considering that the market capacity and liquidity of the silver futures market are significantly lower than those of gold, the scale of passive position adjustments accounts for a notably higher proportion of the total open interest. As a result, silver may face more concentrated technical selling pressure during the rebalancing window, while gold is likely to experience a more moderate technical correction.

## BCOM 2026 Index Rebalancing May Amplify Technical Volatility in Gold and Silver

Bloomberg announced the target weights for the 2026 BCOM, with structural position adjustments potentially amplifying short-term technical volatility in gold and silver. According to Bloomberg, the target weight of the precious metals sector in the 2026 BCOM will remain at a high level of 18.84%, with the gold weight further increased to 14.90% and the silver weight reduced to 3.94%. However, from the perspective of the index’s operating mechanism, against the backdrop of the continuous rise in gold and silver prices, precious metals have become significantly overweight in the funds passively tracking the BCOM. Passive funds tracking the index will be forced to sell their gold and silver futures positions during the rebalancing period. Therefore, the January 2026 index rebalancing may subject gold and silver to technical, rule-driven deleveraging pressure.

## Silver May Face Stronger Passive Selling Pressure Than Gold

In terms of the impact trend of rebalancing, silver is expected to bear stronger passive selling pressure compared to gold. According to Bloomberg, the scale of funds linked to the BCOM stood at approximately $108.8 billion as of October 30. Based on the BCOM gold weight of 19.40% and silver weight of 7.11% announced by Bloomberg on November 28, the adjustment to the new target weights will lead to a decrease of 4.50 and 3.17 percentage points respectively, corresponding to sell orders of $4.896 billion and $3.449 billion. This accounts for 2.2% and 6.3% of the total open interest in the COMEX gold and silver futures markets respectively (data as of December 26). Given that the market capacity and liquidity of the silver futures market are far lower than those of gold, the scale of passive position adjustments accounts for a much higher proportion of its total open interest. Thus, silver may face more concentrated technical selling pressure during the rebalancing window, whereas gold will mostly undergo a mild technical correction.

## Clear Window for Index Weight Adjustments; Past Adjustments Have Limited Determinative Impact

In terms of specific trading rhythms, the "announcement–public notice–effective" timeline for index weight adjustments usually falls in the first two weeks of January. The new weights take effect officially after the close of the 5th trading day, and passive funds gradually complete position shifts in the first to second weeks of January. This window is highly synchronized with the periodic rallies and corrections in gold and silver prices. In addition, a review of past index adjustments shows that Bloomberg adjusted the target weight of gold in both 2024 and 2025. Overall, however, index weight adjustments have a greater impact on short-term trading rhythms and volatility structures, but their determinative role in mid-term trend directions is relatively limited. The ultimate impact will still depend on the macroeconomic environment and the strength of safe-haven demand.

## Passive Selling Does Not Signal a Reversal of the Medium-to-Long-Term Allocation Logic for Gold and Silver

We believe that the passive selling triggered by the 2026 BCOM rebalancing is a periodic technical disturbance, rather than a negation of the medium-to-long-term allocation logic for precious metals. The target weight of precious metals in the index remains at a historically high level, reflecting that their structural value in commodity portfolios has not changed. The passive selling during the rebalancing period will mostly affect short-term trading rhythms and price fluctuations, without altering the long-term positioning of gold and silver in macro hedging, asset allocation, and commodity portfolios. Considering that loose liquidity, rising inflation, and a weak U.S. dollar in 2026 are all conducive to a further upward trend in gold prices, the impact of technical selling pressure brought by the index rebalancing may be relatively limited.

**Source**: Huatai Ruisi

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