BY COMFORT OGBONNA
A dramatic sell-off in gold and silver intensified on Monday after CME Group, the world’s largest derivatives exchange, raised margin requirements for precious metal futures following last week’s sharp collapse in metals prices. The downturn, initially triggered by President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, has wiped out a substantial portion of this year’s gains in the metals market.
Spot gold fell 6.1% to $4,565.79 per ounce by 07:26 GMT, following Friday’s staggering one-day drop of more than 9%—its steepest single-day decline since 1983. The precious metal has now lost over $1,000 in value since reaching a record high of $5,594.82 on Thursday, effectively erasing the gains it had accumulated in the first month of the year.
“The Warsh nomination, while likely the initial trigger, did not fully justify the magnitude of the move in precious metals,” said Tim Waterer, chief trade analyst at KCM. “Forced liquidations and margin increases created a cascading effect that amplified the decline.” Waterer added that Warsh’s policy approach, which tends to support the U.S. dollar through a focus on inflation and skepticism toward quantitative easing, generally weighs on gold.
Despite the turbulence, investors still anticipate at least two interest rate cuts in 2026, which could eventually support non-yielding assets like bullion that benefit from lower rates.
CME Group announced on Saturday that it would increase margin requirements for its precious metal futures, effective after the market close on Monday. Higher margins mean traders must commit more capital to maintain positions, which can reduce speculative activity, decrease liquidity, and force some investors to unwind trades, further pressuring prices.
The sell-off has had a domino effect, as leveraged investors in gold and silver have been forced to liquidate positions, often selling other assets to meet margin calls. The volatility in the metals market has spilled over into global equities, with stock markets across Asia sliding and U.S. equity futures also registering losses.
Technical analysts warn that gold may continue to fall, potentially retracing into a range of $4,361 to $4,476 per ounce after failing to hold a key support level of $4,662. “This is a very aggressive move following Friday’s drop, as Asian and European markets are just now responding to what happened during U.S. trading hours,” said Ilya Spivak, head of global macro at Tastylive. He noted that while gold remains fundamentally supported over the medium term, the market is experiencing a speculative “speed bump” as investors adjust short-term portfolios impacted by margin requirements.
Analysts at J.P. Morgan maintain a bullish outlook on gold despite the recent volatility. They cited a structural trend of investors seeking to diversify into real assets, which continues to drive long-term demand for precious metals relative to paper assets.
Other precious metals faced similar pressure. Spot platinum fell 9.4% to $1,958.93 per ounce, down from its record high of $2,918.80 hit on January 26, while palladium dropped 5.1% to $1,611.86.
The sell-off underscores the sensitivity of global markets to central bank policy signals, margin rules, and investor sentiment. Analysts say that while short-term swings are severe, long-term structural factors—including inflation concerns, portfolio diversification, and continued investor appetite for real assets—could eventually support a recovery in precious metals prices.
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