Short-term fluctuations in precious metals intensify; why do institutions still see growth potential in 2026?

Starting in 2026, precious metals have exhibited a contradictory market trend—gold and silver futures prices continue to rise, but volatility has significantly increased. This is driven both by passive position reductions due to index rebalancing and by exchanges repeatedly raising margin requirements. Several institutions still expect precious metals to have room for growth this year. The collision between short-term pressure and long-term optimism is worth noting.

Two Major Sources of Short-Term Volatility

This week, the downside pressure on precious metals mainly comes from two directions:

Index Rebalancing Triggers Passive Position Reduction

Bloomberg Commodity Index has initiated its annual rebalancing adjustment, significantly reducing the weights of precious metals. While this adjustment appears technical, its impact is substantial—index-tracking funds will passively reduce their positions, creating profit-taking pressure on gold and silver. Such passive reductions are often mechanical and unaffected by market sentiment, but they can increase short-term volatility.

Continuous Margin Increases by Exchanges

CME has raised the margin requirements for precious metal futures again starting after Friday’s trading session. More notably, this is the third adjustment in the past month. The margin for silver has been increased by 28.6%, which is quite significant.

The logic behind exchanges sharply raising margins is clear—by increasing trading costs, they aim to curb high-leverage trading and speculation. This usually suppresses extreme price fluctuations in the short term but may also accelerate some leveraged traders’ liquidations.

Dislocation Between Short-Term Volatility and Long-Term Outlook

From Goldman Sachs’ perspective, compared to gold, silver trading will continue to face high volatility and uncertainty. This judgment reflects the current market situation—silver, as a metal with stronger industrial attributes, is more sensitive to economic expectations and risk appetite.

However, this short-term increased volatility does not change the long-term outlook of many financial institutions. According to recent news, even amid these short-term downward pressures, prices of precious and industrial metals are generally expected to rise in 2026.

Industry-wise, this dislocation actually reflects a normal market adjustment process—after a strong rally, technical factors (index rebalancing, margin hikes) may cause short-term pullbacks and fluctuations, but these are often not signs of trend reversal, rather signs of a healthier trend.

What Investors Should Watch

In the short term, the continuous increase in margins warrants close attention. A 28.6% rise in silver margin requirements means significantly higher trading costs, which can impact the feasibility of leveraged trading. Meanwhile, technical factors like index rebalancing often create noticeable price pressures during specific periods, but their duration is usually limited.

Long-term, the optimistic expectations of many institutions may be based on a comprehensive assessment of economic conditions, geopolitical factors, and monetary policy. Although the news brief does not elaborate on these reasons, the consensus among these institutions alone is worth noting.

Summary

Precious metals at the start of 2026 show a typical “upward with volatility” pattern. The short-term volatility increase is driven by foreseeable technical factors—index adjustments and margin hikes—reflecting market self-regulation. While silver faces higher volatility, many institutions still expect precious metals to have room for growth this year. For market participants, distinguishing between short-term fluctuations and long-term trends is crucial; do not be misled by technical adjustments.