Gold and silver kicked off 2026 on a powerful note, extending a rally that delivered their strongest annual performance since 1979. But just days into the new trading year, a key question is emerging for investors: can precious metals keep climbing, or will technical forces temporarily pull prices lower?
Early trading suggests both answers may be true.
Gold surged toward the $4,400-an-ounce mark, while silver jumped more than 3%, underscoring the momentum that carried both metals through a volatile but historic 2025. The gains were fueled by a potent mix of easing U.S. monetary policy expectations, a weaker dollar, and persistent demand for safe-haven assets amid geopolitical and trade tensions.
Yet beneath the surface, a major index rebalancing event threatens to introduce near-term pressure, regardless of the long-term bullish case.
The Index Rebalancing That Could Move Billions
One of the most immediate risks facing precious metals prices is mechanical rather than fundamental.
Silver currently accounts for about 9% of the Bloomberg Commodities Index (BCOM), a benchmark tracked by passive investment funds worldwide. For 2026, its target weighting drops to just under 4%. To reflect those new allocations, funds tracking the index will need to sell more than $5 billion worth of silver futures during a five-day roll period starting next Thursday.
Gold faces a similar, though slightly smaller, adjustment. Roughly $6 billion in gold futures are expected to be sold as part of the same rebalancing process.
These sales are not driven by a change in sentiment about precious metals, but by the rules governing index construction. Still, such flows can weigh on prices in the short term, particularly in thin trading conditions.
Assets tracking the Bloomberg Commodities Index totaled nearly $109 billion as of October, according to Bloomberg Index Services Ltd., which administers the index and is a wholly owned subsidiary of Bloomberg LP.
A Record-Breaking Run, and Late-Year Volatility
The potential for short-term selling comes after an extraordinary year for precious metals.
Gold set a string of record highs throughout 2025, supported by aggressive central-bank buying, a pivot toward easier Federal Reserve policy, and a broadly weaker U.S. dollar. Rising geopolitical tensions and ongoing trade frictions added to gold’s appeal as a store of value.
Silver outperformed even gold, smashing through levels that many analysts once viewed as unrealistic. In addition to benefiting from the same macro forces as gold, silver gained from concerns that the U.S. administration could eventually impose tariffs on imported refined silver, an issue that has kept supply risks firmly in focus.
That rapid ascent, however, also made the market vulnerable. Late December saw increased volatility as some investors locked in profits and technical indicators began flashing overbought signals.
Why Big Banks Still See Upside
Despite the prospect of near-term turbulence, the broader outlook for gold remains constructive, especially among major financial institutions.
Goldman Sachs Group Inc. said last month that its base-case scenario sees gold climbing to $4,900 an ounce, citing expectations for additional Federal Reserve rate cuts and uncertainty surrounding President Donald Trump’s efforts to reshape U.S. central bank leadership. The bank added that risks to its forecast are skewed to the upside.
Lower interest rates tend to support gold by reducing the opportunity cost of holding non-yielding assets, while a softer dollar makes bullion more attractive to global buyers.
Thin Trading, Big Signals
By midday in London, gold had risen 1.6% to $4,387.57 an ounce, while silver advanced 3.1% to $73.88. Palladium and platinum also posted gains. The Bloomberg Dollar Spot Index edged up 0.1%.
Trading volumes were expected to remain light, with major markets including Japan and China still closed for holidays, a factor that can amplify price moves in either direction.
Gold and silver enter 2026 with powerful momentum, underpinned by macroeconomic tailwinds and structural demand. But before the next leg higher, markets may need to absorb a wave of index-driven selling that has little to do with fundamentals.
For long-term investors, the coming days may test conviction. For traders, they may present an opportunity. Either way, precious metals remain firmly at the center of the global investment conversation as the new year begins.
