Gold and Silver Extend Losses Amid Margin Hikes and Fed Uncertainty

Gold and silver continued their sharp decline on Monday (February 2), pressured by higher CME margin requirements and uncertainty over US President Donald Trump’s nomination of Kevin Warsh as Fed Chair.

Spot gold dropped 3.3% to $4,703.27 per ounce in early Asian trade, after earlier plunging more than 5% to its lowest level in over two weeks. The metal had reached a record high of $5,594.82 per ounce just last Thursday (January 30). Meanwhile, US gold futures for April delivery fell 0.3% to $4,729.20 per ounce.

Silver faced even steeper losses, sliding 5% to $80.28 per ounce, following a record peak of $121.64 last Thursday and a near one-month low on Friday (January 31).

CME Margin Hikes Add Pressure

CME Group raised margins on its metal futures contracts after Monday’s session. COMEX gold margins for 1-ounce contracts rose from 6% to 8%, while COMEX 5,000-ounce silver contracts increased from 11% to 15%. Platinum and palladium contracts also faced higher margin requirements. Such hikes typically curb speculative trading, tighten liquidity, and force traders to unwind positions, adding downward pressure on prices.

Also Read: Gold Falls, Silver Rallies as Investors Reassess US Monetary Outlook

Fed Policy and Dollar Influence

Investors are closely monitoring Warsh’s nomination, analysing how his approach could shape US interest rate policy and the Fed’s balance sheet strategy. Warsh is known for advocating a smaller Fed balance sheet and a cautious stance on quantitative easing, factors that generally strengthen the US dollar and weigh on non-yielding metals like gold and silver.

The dollar has maintained recent gains, making bullion more expensive for holders of other currencies. US producer prices also rose in December at their fastest pace in five months, partly due to import tariffs, signaling persistent inflationary pressures that could allow the Fed to hold rates steady. Despite this, markets still anticipate at least two rate cuts in 2026, which would typically support gold and silver.

What to Watch

Investors will be watching a string of upcoming manufacturing PMI releases from Japan, China, the UK, France, Germany, the Eurozone, and the US for further clues on global economic momentum.

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