Silver price extends slide on index rebalancing

Silver extended its slide on Thursday as investors braced for a commodity index rebalancing and took profits on a metal that has more than doubled in value over the past year.

Spot prices declined as much as 5% to $73.91 an ounce, before paring some losses. It follows a 4% drop from the previous session after surging past $80 per ounce again earlier this week.

Meanwhile, gold held steady after erasing a 1% loss from earlier in the session.

Index rebalancing

Investors are positioning themselves for an annual rebalancing of commodity indexes, which would require funds to sell precious metals futures contracts worth billions of dollars in the next few days.

Citigroup estimates that about $6.8 billion in silver futures could be sold, equivalent to about 12% of open interest on Comex, while outflows from gold futures will total roughly the same amount.

Both metals faced a similar index selloff last year, without causing a discernible drag on the market, according to a December note from JPMorgan Chase. The bank, however, said the amount of selling required in silver is more outsized this year.

Compared to gold, silver is more exposed to index rebalancing, and thus is more volatile. Exchange data showed that silver-backed ETFs saw their biggest one-day outflow since October on Wednesday.

“I’ve been running this process for many years, and we haven’t seen any outsized flow like this one,” said Kenny Hu, a strategist at Citi.

Broadly bullish

Despite the two-day slump, analysts remain broadly bullish on precious metals due to heightened geopolitical risks, namely heightened China-Japan trade tensions and the capture by the US of Venezuelan leader Nicolás Maduro.

Gold is coming off its best annual performance since 1979 after hitting record highs 50 times throughout 2025. The rise was supported by central bank purchases and inflows to ETFs. A sagging US dollar added further fuel to prices, making the metal more affordable for buyers in other currencies.

“The rally is fueled by a potent mix of safe haven and risk-off purchases, spurred in part by USD weakness, and policy uncertainty,” wrote HSBC’s chief precious metals analyst James Steel, who sees gold hitting $5,000 an ounce in the first half of 2026, bolstered by rising geopolitical risks and rising fiscal debts.

Silver was even more spectacular than gold with a gain of 150%, as a historic short squeeze gripped the market last October and helped drive prices to unprecedented levels towards year’s end.

(With files from Bloomberg)

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