(Kitco News) - Silver prices have been unable to hold gains above $80 an ounce, and while the precious metal continues to remain well supported in the long term, more banks are warning investors of potential near-term volatility.
In a report published early Wednesday, commodity analysts at Société Générale said annual index rebalancing poses a significant risk to silver and gold prices, as they were two of the best-performing assets in 2025.
Last year, gold and silver saw their best gains since 1979; the grey metal rallied nearly 150%, and gold prices were up 64%.
The commodity analysts noted that gold and silver represent about 11% of the Bloomberg Commodity Index (BCOM).
“The strong year-end rally in silver places it at the top of expected net selling. We estimate net selling (outflows) from silver and gold of around $5 billion each,” the analysts said.
On the flip side, SocGen sees the most potential in energy markets. Based on rebalancing forecasts, the French bank said that Brent crude could see investment inflows of nearly $2.6 billion. At the same time, West Texas Intermediate (WTI) crude oil could see inflows of $1.7 billion.
The potential shift in the energy market comes as Brent trades below $60 a barrel, its lowest level in nearly five years.
However, SocGen said that the biggest near-term potential gains could be in natural gas.
“Natural gas is no longer expected to be the most sold commodity across the board; it is now expected to be a net buy, owing to its price decline: down 23% since we last ran this analysis in early December,” the analysts said.
SocGen isn’t the only bank paying attention to potential volatility in gold and silver.
“We expect a massive 13% of aggregate open interest in Comex silver markets will be sold over the coming two weeks, to result in a dramatic repricing lower,” Daniel Ghali, a senior commodity strategist at TD Securities, wrote in a note last week.
In a report published Tuesday, Ole Hansen, head of commodity strategy at Saxo Bank, said that any potential weakness could be a buying opportunity, as both gold and silver are starting the new year as cornerstone assets within the global economy.
“[Index rebalancing] 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,” he said.
