Gold and silver prices have fallen for the second day in a row, and investors are preparing for an annual rebalance in the commodity index, which could trigger the sell-off of multi-billion dollar futures contracts over the next few days. The price of spot gold fell below $4,420 an ounce after falling nearly 1% in the previous trading day. Passive tracking funds began selling precious metal futures on Thursday to match the new weight required by the index. This is usually a routine operation, but due to the sharp rise in gold and silver prices last year, this operation is particularly significant. The price of silver fell more than 3% on Thursday, and given recent volatility, silver is particularly prone to a sharp sell-off. Citigroup estimates that approximately $6.8 billion worth of silver futures may be sold to meet rebalancing requirements, equivalent to about 12% of Comex's open positions.

Gold and silver prices have fallen for the second day in a row, and investors are preparing for an annual rebalance in the commodity index, which could trigger the sell-off of multi-billion dollar futures contracts over the next few days. The price of spot gold fell below $4,420 an ounce after falling nearly 1% in the previous trading day. Passive tracking funds began selling precious metal futures on Thursday to match the new weight required by the index. This is usually a routine operation, but due to the sharp rise in gold and silver prices last year, this operation is particularly significant. The price of silver fell more than 3% on Thursday, and given recent volatility, silver is particularly prone to a sharp sell-off. Citigroup estimates that approximately $6.8 billion worth of silver futures may be sold to meet rebalancing requirements, equivalent to about 12% of Comex's open positions.