Gold, Silver Tumble as CME Margin Hike Rattles Markets’

Gold and silver prices plunged on Monday, extending last week’s sharp selloff as higher margin requirements imposed by the CME intensified selling pressure across precious metals markets.

Spot gold dropped 3.2% to $4,708.19 per ounce by 10:08 GMT, after tumbling nearly 10% earlier in the session. The metal had already suffered a steep decline on January 30, marking its worst single-day fall since 1983, when prices sank almost 10%.

Gold has now fallen by roughly $900 from its all-time high of $5,594.82, reached on January 29, wiping out most of its gains for the year.

Meanwhile, U.S. gold futures for April delivery slipped 0.3% to $4,730.40 per ounce, reflecting continued weakness in futures markets.

Silver Extends Losses After Record Rally

Silver prices also came under intense pressure. Spot silver fell 3.4% to $81.65 per ounce, after plunging as much as 15% earlier in the day. The metal has now dropped about 33% from its record peak of $121.64, reached just last week.

The sharp reversal follows a historic rally that saw silver prices surge to unprecedented levels before profit-taking and margin pressures took hold.

CME Margin Increase Fuels Market Volatility

The latest selloff follows the CME Group’s decision to raise margin requirements on precious metal futures, announced on January 30. The new margins are set to take effect after the market close on Monday.

Market analysts say the move has made leveraged positions far less attractive, particularly for retail traders with limited liquidity.

According to Zain Vawda, analyst at MarketPulse by OANDA, higher margins are forcing many traders to unwind positions, creating a negative cycle where falling prices lead to margin calls, triggering even more selling.

“This kind of environment often accelerates losses as traders rush to meet margin requirements,” he noted.

Stronger Dollar Adds Pressure

Adding to the pressure, the U.S. dollar strengthened last week following the announcement that Kevin Warsh has been nominated as the next Federal Reserve chair. A firmer dollar typically makes dollar-denominated commodities like gold more expensive for international buyers.

Although markets expect Warsh to support interest rate cuts, investors also anticipate a tighter Federal Reserve balance sheet—an outlook that tends to favor a stronger dollar.

Outlook for Gold Remains Mixed

Despite the recent volatility, some analysts remain optimistic about gold’s longer-term prospects. Barclays said ongoing factors such as expected rate cuts, fiscal expansion, quantitative easing, currency debasement, and global de-dollarisation could continue to support investment demand for gold.

Platinum and Palladium Also Decline

Other precious metals were not spared. Spot platinum dropped 4.3% to $2,070.64 per ounce, retreating from its recent record high of $2,918.80. Palladium fell 2.1% to $1,662.68 per ounce, tracking the broader weakness across the metals complex.