Gold drops 3.3%, silver slides 5% as markets assess Trump’s Fed pick

Gold extended its fall on Monday with increases in CME precious metals margin ‌requirements set to take effect on session close weighing on prices, while investors gauged U.S. President Donald Trump's Fed chair pick Kevin Warsh's approach to rate cuts.

Spot gold was down 3.3% at $4,703.27 per ounce, as of 0259 GMT, after falling more than 5% earlier in the session to hit its lowest in more than ‌two weeks. Bullion had scaled a record high of $5,594.82 on Thursday.

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

"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 KCM Chief Trade analyst Tim Waterer.

CME Group announced hikes in margins on its metal futures on Saturday and the changes are set to take effect after market close on Monday.

COMEX gold futures ⁠margins (1oz) are raised from 6% to 8%, while COMEX 5000 silver futures (SI) are set to increase to 15% ‍from 11%. Platinum and palladium futures will also see increases in margin requirements.

An increase in margin requirements is generally ‌negative for ‌the affected contracts, as the higher capital outlay can dampen speculative participation, reduce liquidity, and pressure traders to unwind positions.

"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.

"His policy approach has been ⁠generally supportive of the ⁠dollar and by inference, ​negative for gold, due to his focus on inflation and dim views on quantitative easing and excessive Fed balance sheets."

Warsh checks a long list of boxes for Trump as his pick to run the Fed, but how deeply ‍and quickly he will cut interest rates and how aggressively he will pursue his "regime change" at the Fed remain open questions.

Investors still expect at least two rate cuts in 2026. Non-yielding bullion tends to perform better in low-interest-rate environments. 

Spot silver ​fell 5% to $80.28 an ounce. It hit a record high ‍of $121.64 on Thursday before touching a near one-month low on Friday.

Spot platinum lost 4.1% to $2,074.70 per ounce after hitting a record $2,918.80 ​on January 26, while palladium shed 3.3% to $1,642.35.