TLDR:
- Gold dropped nearly 10% and silver 30% as margin hikes forced leveraged liquidations.
- Kevin Warsh’s nomination strengthened the US dollar, pressuring metals prices sharply.
- Silver rebounded 8% after intraday lows, showing oversold conditions correcting.
- Market reset removed weak positions, offering opportunities for disciplined investors.
Gold and silver continue to face sharp volatility. Gold is around $4,665 per ounce, and silver is near $79–$82 per ounce. After facing historic sell‑offs and forced liquidations, both metals remain well below recent record highs.
The market is responding to heightened margin requirements and a stronger US dollar. Partial rebounds signal oversold conditions that are attracting renewed buying interest.
Historic Volatility and Margin-Driven Liquidations
Gold and silver experienced extreme price swings, with gold reaching $5,600 and silver $122 before sharply falling. By Monday, gold traded near $4,700, while silver briefly touched $71 intraday, before bouncing into the $83–87 range.
The immediate catalyst was political: Kevin Warsh’s nomination as Federal Reserve Chair signaled tighter monetary policy. Warsh’s hawkish stance strengthened the US dollar, which increased costs for international buyers of precious metals.
Since gold and silver are priced in dollars, the stronger currency immediately suppressed demand, pressuring prices further. However, the main driver was structural leverage in futures markets amplified by abrupt margin increases.
Gold and silver experienced a historic volatility event that started Friday and continued through Monday.
After reaching all-time peaks of $5,600 for gold and $122 for silver, the market underwent a severe reversal.
Gold is now around $4,700 and silver around $83-87.
This… https://t.co/wkteQZ6OZt pic.twitter.com/cZbuU5L7tL
— StockMarket.News (@_Investinq) February 2, 2026
CME Group raised margin requirements 33% for gold and 36% for silver, forcing traders to either provide capital or liquidate positions. Margin allows traders to control large positions with limited capital, but sudden hikes create urgent selling pressure.
Most leveraged traders could not meet requirements, sparking a cascade of forced selling and rapid price declines. Initial liquidations triggered margin calls for other traders, accelerating panic selling in the metals market.
Stop-loss orders were executed automatically, liquidity quickly vanished, and prices gapped lower than any routine correction. Silver dropped nearly 30% intraday, while gold fell close to 10%, showing how leverage amplified volatility far beyond fundamentals.
Recovery and Market Stabilization
By Monday afternoon, silver rebounded roughly 8%, and gold partially recovered, signaling oversold conditions correcting. Buyers returned once forced selling subsided, stabilizing prices and creating a firmer market foundation.
This rebound suggests weaker traders were removed, leaving stronger hands and more controlled trading dynamics. Fundamental factors supporting precious metals remain unchanged, including geopolitical tensions and currency concerns.
Institutional forecasts remain bullish, with gold projected to reach $6,300 by the end of 2026 according to major banks. The volatility event created buying opportunities for patient investors willing to enter markets at lower prices.
Higher margin requirements now reduce the likelihood of repeat forced liquidations in futures markets. This event effectively purged over-leveraged positions, resetting the market on a more stable footing.
Precious metals markets are gradually stabilizing, offering long-term confidence for disciplined investors watching for entry points.
