Gold falls as commodity index rebalancing sparks selling pressure

Gold prices fell on Thursday as investors braced for futures selling tied to a commodity index reshuffle, with a stronger U.S. dollar adding pressure by making the metal costlier for overseas buyers.

Spot gold fell 0.7% to $4,420.09 per ounce, as of 1228 GMT. U.S. gold futures for February delivery fell 0.8% to $4,427.70.

“Gold and silver remain under pressure as the annual commodity-index rebalancing gets underway. Over the next five days, COMEX futures could see selling in the region of $6 to $7 billion in each metal,” said Ole Hansen, head of commodity strategy at Saxo Bank.

The annual Bloomberg Commodity Index rebalancing, designed to keep the index aligned with the current state of the global commodity market, begins this week.

“(The U.S.-Venezuela conflict) added a small georisk premium at the beginning of the week which is now deflating as the attention turns to the rebalancing,” Hansen added. Source: Reuters