CME raises gold, silver margins after prices plunge to historical lows

CME Group is raising margin requirements on Comex gold and silver futures after the metals saw some of their steepest declines in decades. The move is aimed at safeguarding market stability amid heightened volatility.

According to an exchange statement issued Friday, margins for gold futures under the non-heightened risk profile will be increased to 8% of the underlying contract value from the current 6%. For positions classified under the heightened risk profile, margins will rise to 8.8% from 6.6%.

Silver futures will see even steeper revisions. Margins for non-heightened risk positions will climb to 15% from 11%, while those under the heightened risk category will be raised to 16.5% from 12.1%. The exchange also announced margin increases for platinum and palladium futures, reflecting broader volatility across precious metals.

The revised margin requirements will take effect from Monday’s close. CME Group said the decision follows a routine review of market volatility to ensure adequate collateral coverage and maintain orderly trading conditions.

Higher margins mean traders in gold, silver, platinum and palladium futures will now have to deposit additional collateral to maintain their positions. While margin adjustments are a standard response during periods of sharp price swings — whether upward or downward — the latest move could make it more challenging for smaller participants with limited capital to remain active in the market.

Earlier this week, the exchange had already raised margins for silver, platinum and palladium futures after strong price rallies.

On Friday, spot silver in the international market tanked 28% to $85 per troy ounce. The white metal touched a record high of $121.60 earlier in the week.

On the MCX, Silver March futures plunged 27% — or Rs 1,07,968 — in a single day, marking its worst ever crash and dragging prices back below the Rs 3 lakh mark, just a day after the metal had soared to a record high of Rs 4 lakh.

Also read: Silver crashes over Rs 1 lakh to log worst-ever fall on MCX. 3 factors behind the decline

Gold prices also reversed sharply on Friday, down 4.7% at $5,143.40 an ounce. On the MCX, gold February futures tanked 12% or Rs 20,514 to close the session at Rs 1,50,440 per 10 grams, marking their worst one-day rout since March 2013, when prices had plunged 9% on the MCX.

The primary trigger was the nomination of Kevin Warsh as the next US Federal Reserve Chair by President Trump. Mr. Warsh, known for his hawkish stance on inflation control and emphasis on Fed independence, prompted a rapid macro re-pricing: the US dollar strengthened, real yields rose, and leveraged positions in gold and silver, viewed as overextended debasement hedges, unwound swiftly.

This led to violent liquidation, erasing billions in market value and flushing out weak hands in what he described as a classic euphoria-to-exhaustion phase, rather than signalling a structural bear market reversal.

Despite the severity of the pullback, the secular bullish structure heading into 2026 remains firmly intact, Ponmudi R of Enrich Money said. Core drivers persist, with relentless central bank buying being the most significant.

The correction serves as a healthy reset, purging excess leverage, speculative froth, and overbought conditions, thereby positioning the market for more sustainable upside once sentiment stabilises and buy-on-dip interest returns. “Near-term caution is warranted due to dollar strength and volatility, but medium-to-long-term forecasts stay firmly bullish,” Ponmudi said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)