Gold and silver deepen their falls this Monday after the strong massive sell-off recorded at the end of last week, in a movement that has been amplified by the increase in margin requirements announced by CME Group and by the change in expectations regarding the Federal Reserve (Fed) following the nomination of Kevin Warsh as the next president of the US central bank by Donald Trump. Spot gold recorded its biggest daily drop since 1983 on Friday, with a decline of more than 9%. This Monday, the precious metal lost another 4.6%, to $4,494 per ounce. Silver has suffered an even more severe adjustment. After collapsing 27% in the previous session, in its worst daily drop in history, the white metal lost an additional 4% this Monday and was trading around $75.37 per ounce. According to Tim Waterer, chief trading analyst at KCM, «Warsh’s nomination (as Fed Chairman), while likely the initial trigger, did not justify the magnitude of the bearish move in precious metals, as forced liquidations and margin increases had a cascading effect.» On Saturday, CME Group announced an increase in margin requirements for metals futures, which will take effect after the market closes on Monday. Specifically, spreads on COMEX gold futures (1oz) rise from 6% to 8%, while COMEX 5000 silver futures rise to 15% from 11%. Requirements for platinum and palladium contracts will also be raised. These types of measures usually have a negative impact on the affected assets, since they force investors to contribute more capital, reduce liquidity and force many traders to close positions. Market analysts pointed out that numerous leveraged investors have been expelled, even being forced to sell other assets to cover margin calls on gold and silver, in a context in which Asian stock markets and Wall Street futures also recorded falls. Waterer added that while the market expects Warsh to be able to cut rates soon after taking office, «it’s not the ultra-dovish nomination the market had priced in.» In his opinion, his approach, traditionally stricter with inflation and critical of quantitative easing, has been favorable to the dollar and, by extension, negative for gold. Although investors continue to expect at least two rate cuts in 2026, an environment that typically benefits non-yielding precious metals, the recent crash appears to have temporarily ended the bull run that took gold to an all-time high of $5,594.82 per ounce and silver to a record high of $121.64. In the rest of the precious metals complex, spot platinum fell 4.4%, to $2,067.06 per ounce, after having set an all-time high of $2,918.80 on January 26, while palladium fell 4.6%, to $1,620.18.
