The important commodity index rebalancing is imminent, and gold and silver futures will face significant selling pressure!
JP Morgan warned that due to three consecutive years of outperforming the market, the weight of gold and silver in the Bloomberg Commodity Index (BCOM) has been severely overweighted. During the index rebalancing in January 2026, passive funds will be forced to conduct a "technical sell-off." It is expected that the scale of futures selling will account for 9% and 3% of the total holdings of silver and gold, respectively
A foreseeable "technical storm" driven by index rules is about to arrive, with the center of the storm being the recently strong-performing gold and silver.
According to news from the Chase Trading Desk, JP Morgan's global commodity research report released on December 12 indicates that the highly watched Bloomberg Commodity Index (BCOM) will undergo its annual weight rebalancing in January 2026. This technical adjustment is expected to exert significant selling pressure on gold and silver futures, with a scale sufficient to materially impact short-term market sentiment and prices.
After three consecutive years of gains, gold and silver face massive technical selling pressure
The core driving factor is very clear: the pressure of mean reversion. The JP Morgan report points out that due to gold and silver significantly outperforming other commodities over the past three consecutive years, their weights in the BCOM index have naturally risen to excessively high levels. To bring the index weights back to target allocations, passive funds tracking the index will be forced to sell gold and silver futures positions during the rebalancing period.
The report provides astonishing quantitative forecasts for the scale of the sell-off:
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Silver: It is expected to face the heaviest selling, with the sell orders accounting for about 9% of its total open contracts in the futures market. The report particularly emphasizes that this year's selling pressure on silver is "more pronounced than last year," warranting high vigilance from investors.
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Gold: The scale of the sell-off is expected to account for about 3% of its total open contracts in the futures market. Although the proportion is lower than that of silver, considering the large market size of gold, the absolute amount of selling remains quite substantial.
This series of forced sell operations will be concentrated during the BCOM index roll period from January 8 to 14, 2026, during which the market may experience concentrated capital outflows.
Seasonal bullishness VS. Technical selling: January's gold trend adds uncertainty
For gold investors, the upcoming January will be a fierce battle of bullish and bearish factors.
On one hand, the JP Morgan report reaffirms the traditional strong seasonal pattern of gold from the end of the year to the beginning of the next year. Data shows that over the past 10 years, gold prices have averaged a 4.6% increase during the last 10 trading days of each year to the first 20 trading days of the next year, with an 80% probability of rising (8 out of 10 times). This "holiday buying" usually also transmits to silver and platinum.
On the other hand, the significant technical selling triggered by the index rebalancing will directly counter this seasonal bullishness. The report warns that although last year's similar index sell-off did not prevent the seasonal upward trend, given that this year's selling pressure on silver is significantly greater, investors need to closely monitor whether this variable will break historical patterns.
Cocoa, Energy, Industrial Metals: Some rejoice, some worry
The impact of this rebalancing extends far beyond precious metals; the differences in weight adjustments between different indices will also create complex bullish and bearish dynamics in other commodities. According to JP Morgan's analysis:
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Cocoa emerges as the biggest winner. Due to its re-inclusion in the BCOM index, cocoa is expected to see a massive buying equivalent to 22% of its total open contracts, far exceeding other agricultural products
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Energy market has a limited overall impact, but natural gas will face selling pressure equivalent to about 3% of its total open contracts.
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Industrial metals will see moderate buying, with lead (Lead) receiving the most buying impetus, approximately 3% of its total open contracts.
In addition, the report's outlook for the oil market is cautious, predicting that the global oil supply surplus will further expand in 2026 and 2027, putting downward pressure on oil prices, while the burden of balancing the market will mainly fall on the supply side.
Index divergence intensifies volatility, focus on the key window period in January
It is important for the market to note that this rebalancing involves not only BCOM but also the S&P Goldman Sachs Commodity Index (S&P GSCI) family, and the adjustment windows of both are highly overlapping (from January 8 to 15, 2026). Data shows that the asset scale tracking BCOM exceeds $60 billion, and such a large concentration of funds adjusting will inevitably amplify market volatility.
More notably, there is a significant divergence in the adjustment directions of the two major indices. For example, in cocoa, BCOM is buying heavily, while S&P GSCI is selling significantly. This divergence may trigger cross-index arbitrage activities and abnormal volatility.
For investors, the second week of January 2026 will be a key observation period. Market participants should prepare for the following scenarios: increased volatility at the beginning of the year, changes in the price spread of key commodity pairs (such as Brent-WTI crude oil), and short-term distortions in the futures near-month contract curve.
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