Head of Commodity Strategy
At a macro level, familiar themes continue to dominate. Concerns about currency debasement and the long-term sustainability of fiscal debt creation remain unresolved, while expectations of lower policy rates later in the cycle and a softer US dollar continue to underpin investor demand for hard assets. In that sense, the turn of the calendar has done little to change the broader investment narrative.
For silver and platinum, the case is reinforced by more structural factors. Both markets face persistent supply constraints at a time when industrial demand remains robust. Silver continues to benefit from its dual role as a monetary and industrial metal, while platinum demand is supported by autocatalysts, industrial applications, and a lack of meaningful new mine supply. These tight balances leave prices particularly sensitive to even small shifts in demand or disruptions on the supply side.
As 2026 begins, geopolitics has added an additional layer of uncertainty. The US capture of Venezuelan leader Nicolás Maduro has raised questions about what comes next in Central and South America, increasing regional risk premia. More broadly, assertive US actions in its own backyard risk reinforcing territorial ambitions elsewhere, notably in China and Russia, contributing to a more fragmented and volatile global landscape.
Taken together, these macro, structural, and geopolitical factors help explain why investors have returned quickly to precious metals at the start of the year. With limited spare supply and elevated uncertainty, gold, silver, and platinum appear well positioned to remain core hedges in a potentially turbulent 2026.
Beyond continued robust central bank buying in 2025, strong investment demand played a key role in underpinning gold’s gains. Exchange‑traded fund demand remained firm throughout the year, lifting total holdings in bullion‑backed ETFs to almost 99 million ounces by year‑end, a three‑year high, valued at around USD 427 billion. Net inflows of 15.6 million ounces effectively offset the combined sales of 14.3 million ounces seen over the previous three years. In the futures market, speculators held a net long of around 22 million ounces in COMEX gold at year‑end, down from a February peak near 31 million ounces, with the reduction largely reflecting higher prices forcing leveraged traders to scale back positions to maintain stable nominal exposure.
Silver followed a similar pattern. Strong investment demand pushed total silver‑backed ETF holdings to a three‑and‑a‑half‑year high of around 860 million ounces, up 21% on the year and close to offsetting the cumulative selling of the prior three years. In contrast, leveraged traders in COMEX silver futures were net sellers throughout the second half of 2025, as the sharp price rally required position reductions to stay within predefined risk and exposure limits. By 30 December, the combined managed money and other reportable net long had fallen to around 143 million ounces, a near two‑year low, down from a June peak of roughly 332 million ounces.
A key near-term risk for precious metals is the annual rebalancing of major commodity index funds, such as the S&P GSCI and Bloomberg Commodity Index, which runs for five business days from 8 January. This once‑yearly, rules‑based process realigns index weights back to their predefined targets after a year of uneven price performance across sectors and individual commodities.
Following a strong 2025 for gold and silver, and additional gains into early 2026, index‑tracking funds are required to reduce exposure to recent outperformers and reallocate toward weaker or underweighted sectors. These flows are price‑insensitive and technical in nature, but they can still have a noticeable short‑term impact on liquidity and price action.
According to estimates from Goldman Sachs based on prices as of 29 December, precious metals stand out as the most affected sector. Goldman estimates selling of around USD 5.5 billion in gold and roughly USD 5 billion in silver. While gold has since risen by about 3% and silver by around 11.5%, the scale of the expected selling remains meaningful.
Goldman also notes that the estimated silver selling alone is equivalent to roughly 10% of an average day’s trading volume, based on the past two weeks’ elevated activity. This highlights the risk of short‑term volatility during the rebalancing window, even if any weakness is more likely driven by technical flows than by a deterioration in the broader fundamentals. It is also worth noting that platinum, despite its strong performance, is not included in these indices and is therefore not exposed to rebalancing‑related selling.
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