LONDON, February 2, 2026, 07:20 (GMT)
- Gold and silver are still plunging after hitting record highs last week
- Rising margins squeeze leveraged positions, sparking forced selling
- The decline is spreading to other commodities, stocks, and cryptocurrencies
Gold and silver slid further on Monday after CME Group raised margin requirements for metal futures, deepening the sell-off triggered by President Donald Trump’s nomination of Kevin Warsh to head the Federal Reserve. By 0504 GMT, spot gold had dropped 3.6% to $4,686.51 an ounce, while silver plunged 6.7% to $78.96, extending its steep 27% plunge from Friday. Tim Waterer at KCM Trade pointed to “forced liquidations and margin increases” as key drivers. (Reuters)
Speed matters. What started as a simple trade turned into a scramble for liquidity, as losses forced investors to cut positions aggressively. Tighter margin rules mean leveraged traders face margin calls—requests for extra funds—that often spark selling into declining markets just to avoid default.
The Warsh pick has shifted focus back to rates and the central bank’s balance sheet. In market terms, a “hawkish” policy-maker tends to favor keeping rates higher to tackle inflation. Because gold doesn’t pay interest, higher rates often weigh on its appeal—even as some investors continue to view it as a hedge.
Commodities plunged, with oil sliding almost 5.5% and London copper shedding nearly 5% in early trading. Vivek Dhar of Commonwealth Bank of Australia said metals falling alongside U.S. stocks suggested investors were interpreting Warsh’s stance as “more hawkish.” He added that a firmer dollar was weighing on the commodity complex. (Reuters)
Metals plunged across Asian markets, with silver crashing as much as 14.2% to $72.63 and gold sliding up to 7.5% to $4,499.34 at one point. Christopher Forbes from CMC Markets described the move as “risk off and de-leveraging.” Mark Matthews at Bank Julius Baer blamed a prior rally that “had already gone parabolic.” Meanwhile, Gregor Gregersen of Silver Bullion highlighted “shortages in retail silver products for months,” noting premiums have spiked sharply. (Reuters)
Gold edged near $4,480 an ounce during early European trading, with silver at $73.94. Both crypto and energy prices took a hit. Bitcoin stayed near $75,142, while Brent crude lingered around $65 a barrel. Hong Kong shares fell about 3%, and London stocks appeared poised for a lower open, according to IG. (Sky News)
The pullback hit miners and traders who had piled into the rally. Gold slid about 7.8% to $4,515, with silver crashing 14.4% to $73. Raymond Cheng from Standard Chartered said the drop stemmed from a sell-off in speculative gold bets. Shares of Newmont Corporation fell nearly 10%, while Zijin Gold International dropped roughly 5.6%, the Financial Times reported. (Financial Times)
Despite recent steep losses for traders, some banks remain bullish on gold. JPMorgan projects that central-bank and investor demand will drive gold prices up to $6,300 an ounce by year-end. The bank also anticipates central banks to buy 800 tonnes of gold in 2026. JPMorgan is more measured on silver but still expects prices to hold steady around $75-$80 an ounce for the time being. (Reuters)
That said, the short-term outlook is still uncertain. If forced selling picks up, especially as new margin requirements take effect, prices could dive further, spreading the chaos to other markets. A quick reversal, however, could flip the script. When margin calls ease, bargain hunters tend to rush back into precious metals fast.
