The month of January is set to bring about significant changes in the commodity market, as the BCOM index undergoes rebalancing. According to recent reports, gold, silver, and aluminium are likely to be negatively affected during this period, while cocoa, crude oil, natural gas, and gas oil may experience a positive impact.

To better understand the potential effects of these changes, let’s take a closer look at the factors involved. The rebalancing window for 2023 is scheduled to run from January 9th to January 15th, giving traders and investors ample time to adjust their positions accordingly.

One key aspect to consider is the impact of gold and silver selling on their prices. Depending on the lookback windows and the frequency of changes (either weekly or monthly), the potential sensitivity of these ETFs could be anywhere from 2.5-3.0%. This means that a total of 2.4 million troy oz of gold selling could potentially result in a 2.5-3.0% drop in the gold price.

Another important factor to consider is the scale of rebalancing supply and demand for various commodities. Using an open interest metric, we can see that silver, aluminium, and gold are the top three commodities with the largest rebalancing supply, while WTI crude oil, natural gas, and low sulphur gas oil have the highest rebalancing demand.