The precious metals market was already under heavy pressure following Friday’s historic plunge. Spot gold recorded its sharpest one-day fall since 1983, tumbling more than 9% in a single session. The decline continued into Monday, with gold shedding a further 3.6% to trade at $4,686.51 per ounce by 0504 GMT. U.S. gold futures for April delivery were down 0.8% at $4,707.60 per ounce.
Silver suffered even more dramatic losses. Spot silver collapsed by 27% on Friday, marking its worst daily fall on record, and extended the rout on Monday with an additional 6.7% drop to $78.96 an ounce.
Market analysts say the scale of the selloff far exceeded what might normally be expected from the Fed nomination alone. “The Warsh nomination, whilst likely being the initial trigger, did not justify the size of the downward move in precious metals,” said Tim Waterer, Chief Market Analyst at KCM Trade. “Forced liquidations and margin increases have had a cascading effect.”
On Saturday, CME Group announced higher margin requirements for several metal futures contracts, with the changes due to take effect after the market close on Monday. Margins on COMEX gold futures (1oz) were raised from 6% to 8%, while margins on COMEX 5000 silver futures will increase from 11% to 15%. Futures contracts for platinum and palladium are also facing higher margin requirements.
Such increases typically weigh on prices by raising the cost of holding leveraged positions. Higher margins can dampen speculative participation, reduce liquidity and force traders to unwind positions, particularly during periods of extreme volatility.
Analysts noted that leveraged investors were being squeezed out of the market, triggering margin calls that forced them to sell other assets to raise cash. The pressure spilled into broader markets, with Asian equities sliding and U.S. stock futures down about 1%.
Warsh’s nomination has also shifted expectations around U.S. monetary policy. While investors still anticipate at least two interest rate cuts in 2026, Warsh is not viewed as the aggressively dovish candidate some market participants had hoped for. “Warsh may still lower rates soon after he gets into office, but he is not the ‘ultra-dove’ nomination that the market had largely priced in,” Waterer said.
He added that Warsh’s policy stance has historically been supportive of a stronger dollar and, by extension, negative for gold, given his emphasis on inflation control and scepticism toward quantitative easing and an expanding Federal Reserve balance sheet. A stronger dollar and higher real yields tend to weigh on non-yielding assets such as gold and silver.
The violent selloff appears to have at least temporarily halted the record-breaking rally in precious metals. Gold had surged to an all-time high of $5,594.82 per ounce on Thursday, while silver touched a record $121.64, fuelled by strong investor demand for hard assets and expectations of looser monetary policy.
Other precious metals also came under pressure. Spot platinum fell 4.4% to $2,067.06 per ounce, retreating sharply from its January 26 record of $2,918.80, while palladium dropped 4.6% to $1,620.18.
Despite the current turbulence, some analysts remain optimistic about the longer-term outlook. Analysts at J.P. Morgan said they expect the broader rally in gold to remain intact over the medium term, citing structural factors supporting demand.
“We remain firmly bullishly convicted in gold over the medium-term on the back of a clean, structural, continued diversification trend that has further to run amid a still well-entrenched regime of real asset outperformance versus paper assets,” the bank said in a note.
For now, however, heightened volatility, tighter margins and shifting expectations around U.S. monetary policy continue to dominate sentiment, leaving precious metals markets bracing for further near-term turbulence.