Gold, silver under pressure: Why precious metals are losing shine

Gold and silver extended their losses on Monday (Febraury 2), weighed by rising CME margin requirements and uncertainty over US President Donald Trump’s Fed chair pick, Kevin Warsh.

Spot gold fell 3.3% to $4,703.27 per ounce early in Asian trade, after dropping more than 5% earlier in the session to its lowest in over two weeks. The metal had hit a record high of $5,594.82 an ounce last Thursday (January 30).

US gold futures for April delivery were down 0.3% at $4,729.20 per ounce.

Spot silver slid 5% to $80.28 per ounce, following a record high of $121.64 last Thursday (January30) and a near one-month low on Friday (January 31).

Analysts said the sharp declines reflected both reactions to Warsh’s nomination and forced liquidations triggered by margin changes. “The Warsh nomination, whilst likely being the initial trigger, did not justify the size of the downward move in precious metals, with forced liquidations and margin increases having a cascading effect,” said Tim Waterer, chief trade analyst at KCM.

CME Group raised margins on its metal futures starting after Monday’s session close. COMEX gold margins (1 oz contracts) will rise from 6% to 8%, while COMEX 5000 silver contracts increase from 11% to 15%. Platinum and palladium contracts also face higher margin requirements. Margin hikes generally reduce speculative trading, tighten liquidity, and pressure traders to unwind positions.

Fed policy and dollar influence

Investors have closely watched Warsh’s nomination, assessing how his leadership might shape interest rate policy and the Fed’s balance sheet strategy. Warsh is known for supporting a smaller Fed balance sheet and maintaining a cautious stance on quantitative easing, which generally supports the U.S. dollar and weighs on non-yielding metals like gold and silver.

The dollar held onto recent gains, making gold and silver more expensive for holders of other currencies. Meanwhile, US producer prices rose in December at their fastest pace in five months, partly reflecting import tariffs. The data suggests inflationary pressures could persist, giving the Fed room to keep rates steady in the near term. Even so, markets continue to price in at least two rate cuts in 2026, which would generally support bullion.

Outlook: Mixed signals

Analysts remain divided on the near-term direction of precious metals. Sandip Raichura of PL Capital said short-term volatility is likely to persist, but gold’s long-term fundamentals remain strong, potentially reaching $6,000 per ounce over the next two years and moving toward $8,000 in the medium term.

Silver, however, faces greater uncertainty. Raichura cautioned that prices have become “severely overbought” and could test support near $60 per ounce globally—still above production costs but well below recent peaks.

Rajkumar Subramanian of PL Wealth advised investors to avoid lump-sum silver purchases due to its high annual volatility of 25–35%, recommending staggered buying instead to manage risk while maintaining exposure to demand from solar, electronics, and manufacturing sectors.

Gaurav Garg of Lemonn Markets Desk described the recent pullback as a healthy consolidation rather than a trend reversal, but noted that high prices have dampened physical demand in India, contributing to potential short-term swings.

What to watch

Investors will monitor a series of manufacturing PMI releases this week from Japan, China, the UK, France, Germany, the Eurozone, and the United States for further signals on global economic momentum.