Billions of dollars in selling pressure is approaching! Rebalancing of indices triggers a huge earthquake, causing gold and silver prices to fall for two consecutive days.

Investors are preparing for the upcoming annual rebalancing of the major commodity indexes - futures contracts worth billions of dollars may be sold over the next few days, causing a second consecutive day of decline in gold and silver prices. Data shows that spot gold prices briefly fell below the $4,420 per ounce mark, with a drop of nearly 1% from the previous trading day, while spot silver prices fell over 3% to $76.11 per ounce. Platinum and palladium prices also continued their decline from the previous trading day. Passive tracking funds began selling precious metal futures on Thursday to match the latest weights after the index adjustment, a routine operation that has a significant impact on the market this time due to the spike in gold and silver prices last year. With recent market volatility intensified by the index rebalancing factor, silver faces significant selling pressure. Citigroup estimates that this rebalancing could trigger around $6.8 billion in silver futures sales, equivalent to 12% of the total open interest in silver futures on the Commodity Exchange (COMEX) in New York. Based on fund data tracking the Bloomberg Commodity Index and the S&P Goldman Sachs Commodity Index, Citigroup estimates that the outflow of gold futures will be similar to silver. This large-scale sell-off is due to the sharp increase in the weight of precious metals in major commodity benchmark indices. "I have been working on index rebalancing for many years, and I have never seen such a large-scale flow of funds," said Citigroup strategist Kenny Hu. Despite short-term price pressure, gold and silver prices have not shown signs of a significant pullback after recording their best annual performance since 1979. Last year, due to multiple positive factors such as major central banks increasing their gold reserves and continuous inflows into gold ETF funds, international gold and silver prices repeatedly hit historical highs. A report released by the World Gold Council on January 6th showed that global central banks' net purchases of gold reached 45 tons in November. Data released by the People's Bank of China on Wednesday showed that the Chinese central bank has been increasing its gold reserves for the 14th consecutive month, making official gold purchases a continuing important support for gold prices. In addition, the escalating tensions in Sino-Japanese trade relations, as well as events such as the detention of Venezuelan President Nicolas Maduro by the United States, have also provided support for gold prices in recent weeks. As of the close of trading on Wednesday, international gold prices had risen by around 3% in a single week. Traders are now turning their attention to key U.S. economic data, including the employment report for December, scheduled to be released on Friday. Weak data will strengthen the market's expectations of further interest rate cuts by the Federal Reserve, which is undoubtedly a positive factor for non-interest-bearing precious metals. Compared to gold, silver saw a more impressive increase last year, with a total gain of about 150%. In October last year, the silver market experienced a historic short squeeze, while concerns over potential U.S. import tariffs further pushed up silver prices. David Wilson, head of commodity strategy at BNP Paribas in Paris, said, "Index rebalancing may limit the upward momentum of gold and silver prices in the short term, but in the long run, silver still has stronger potential for further growth."