Goldman Sachs expects $7.5 billion in buying of gold and silver in January next year, while crude oil faces selling pressure of $7.9 billion.

Materials from Goldman Sachs' commodities trading desk released on Wednesday show that the January 2027 commodity index rebalancing is expected to bring about $7.5 billion in gold and silver buying, while generating approximately $7.9 billion in crude oil selling.

Specifically, gold purchases are expected to reach $4.51 billion, and silver purchases are projected at $3.04 billion; WTI crude oil is expected to see sales of $3.8 billion, and Brent crude oil sales of $4.08 billion, totaling $7.88 billion.

These estimates are based on Tuesday’s market prices, assuming that the assets tracking the S&P Goldman Sachs Commodity Index (GSCI) and Bloomberg Commodity Index (BCOM) stand at $35 billion and $130 billion, respectively. The final transaction amounts and number of contracts may still be adjusted with price changes.

It is worth noting that the portfolio adjustment direction for gold and silver has reversed compared to the previous three years.

According to Goldman Sachs data, from 2024 to 2026, the expected annual gold portfolio adjustment was net sales of $4.33 billion, $4.03 billion, and $5.53 billion, while for silver it was $710 million, $3.04 billion, and $5.11 billion, respectively. However, in January 2027, both metals are expected to be net purchases.

Goldman Sachs attributes this shift mainly to previous price declines in precious metals. Annual rebalancing of the commodity indices requires portfolio adjustments according to target weights, and price changes affect contract allocations; therefore, these related purchases are passive adjustments driven by index rules and should not be interpreted as active bullishness from fund managers.

In contrast, oil and refined products will see adjustments in the opposite direction. In addition to about $7.9 billion in crude oil sales, gasoline, low-sulphur diesel, and New York Harbor heating oil are expected to see sales of $1.31 billion, $2.8 billion, and $2.15 billion, respectively.

In terms of market size, the expected gold buying amounts to 2.8% of its total open interest in futures contracts, while for silver, it reaches 10.4%; the WTI and Brent crude oil sales represent 2.2% and 1.8% of their respective open interest.

The relative scale of adjustment for silver is significantly greater than for other major commodities, but these percentages only reflect potential transaction sizes and cannot directly indicate price movements.

Goldman Sachs expects that most rebalancing trades will be executed between the fifth and ninth business days of January 2027, though some transactions may be spread throughout the month and involve futures contracts of different expiry months.

Meanwhile, there was a rebound in the precious metals market earlier this week. A weaker US dollar and falling US Treasury yields provided support for gold prices, reducing the opportunity cost of holding the non-interest-bearing asset.

However, Goldman Sachs’ trading desk observations on Thursday indicated that the recent gold price rebound includes short covering by trend-following CTA strategies, with their models having already reached near maximum short positions, but no clear signs have been observed of a significant return by clients to gold trading.

Fund flows are also showing signs of caution. Goldman Sachs data shows that the SPDR Gold ETF saw its first monthly net outflow since June, amounting to $1.8 billion, almost offsetting September’s inflows.

Regarding the January 2027 index portfolio adjustment, Goldman Sachs emphasizes that the current estimates of $7.5 billion in precious metal buying and $7.9 billion in crude oil selling are preliminary, and actual execution will still depend on the prices, contract allocations, and trading schedules at that time.