Gold Tumbles 4.1% Amid Anticipation of Major Index Rebalancing

Gold futures settled at $1,842.30 per ounce on January 7, 2026, a decline of $79.20, or 4.1%, the largest daily drop since November 2023. The move came amid shifting sentiment in global financial markets, as investors began unwinding long positions in precious metals ahead of a scheduled rebalancing of major benchmark indices. Silver dropped even more sharply, closing at $23.85 per ounce—down 5.3%—after a brief rally earlier in the week. Both metals are traditionally viewed as safe-haven assets, but weakening demand for protection amid improving U.S.-China trade relations has reduced their appeal. The decline is attributed to a coordinated shift in portfolio allocations expected to coincide with the quarterly rebalancing of the MSCI All Country World Index and the S&P Global Broad Market Index. Institutional investors and algorithmic trading platforms are adjusting holdings to align with revised weightings, favoring equities and growth-oriented sectors over fixed-income and commodity-based assets. This realignment has led to increased selling pressure on gold and silver, particularly in exchange-traded products and futures contracts. The price swings impacted mining stocks, with the VanEck Gold Miners ETF (GDX) falling 6.4% and the iShares Silver Trust (SLV) shedding 5.8% in one session. Major producers such as Newmont Corporation (NEM) and Pan American Silver (PAAS) saw their market value drop by $1.3 billion and $420 million respectively, reflecting the broader market’s risk-off shift. The U.S. dollar index rose 0.7% during the same period, further pressuring dollar-denominated commodities. Market analysts warn that volatility may persist through the week as rebalancing-related trades continue. The Federal Reserve's upcoming policy meeting on January 11 is also on investors' radar, adding another layer of uncertainty. For now, the momentum in precious metals appears to be firmly downward, with no immediate signs of stabilization.