FX.co ★ Silver Slips on Index Rebalancing and Profit-Taking

Silver experienced a significant drop of 5%, falling to approximately $74 per ounce on Thursday. This marks another day of decline as investors adjust their positions in anticipation of the annual rebalancing of major commodity indexes. This upcoming rebalancing will result in the sale of billions of dollars in futures contracts in the days ahead. Despite silver's impressive performance last year, the mechanical selling by passive funds aiming to align with new index weightings has increased short-term pressure on the market. Additionally, investors are keeping a close eye on geopolitical issues, including the continuing US involvement in Venezuela and the escalating tensions between China and Japan. Furthermore, market participants are awaiting Friday’s release of the US nonfarm payrolls report to gain more clarity on future monetary policy decisions. Currently, there is a near 90% likelihood that the Federal Reserve will maintain steady interest rates, although traders are still expecting multiple rate cuts later in the year.