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Commodity Markets Brace for Volatility: Metal Stocks Dip
8 Jan
Summary
- Index rebalancing triggers massive fund shifts across commodities.
- Precious metals may see a 12% sell-off due to index weight adjustments.
- Brent crude price could rise towards $62 per barrel amid selective inflows.
Global commodity markets are experiencing significant volatility as annual rebalancing of major indices prompts large fund reallocations. Precious metals, including gold and silver, have entered a corrective phase and may face further declines as their weight in indices is reduced. This rebalancing exercise could lead to substantial outflows from futures markets.
Conversely, the energy sector may see selective inflows. An increased weightage for Brent crude in commodity indices could support its prices, with potential near-term gains projected. Industrial metals like copper might also experience a short-term correction due to index adjustments, despite strong long-term demand fundamentals.
Analysts caution that while technical rebalancing is driving near-term volatility, underlying supply-demand dynamics will be the primary influence on commodity prices throughout 2026. The copper market, in particular, faces a significant deficit, while aluminum appears better positioned with potential for a deficit next year, and zinc prices may drift lower.
