BlockBeats News, February 2nd. The recent violent fluctuation in precious metal prices has retraced the strongest rally of 2026, leading to the possibility of massive selling pressure on the stock market (the Japanese and South Korean stock markets have already experienced pressure during Asian trading hours). On Monday, the price of gold fell by 10% at one point, while silver (SI=F) dropped by over 15%. As of the time of writing, the declines in both have narrowed, and the widespread market downturn has made investors worried that the U.S. stock market will continue to be under pressure after opening, with ETF selling leading to a further decline in the crypto market.
Tareck Horchani of Malaya Bank Securities stated that Trump’s nomination for Federal Reserve Chair has triggered cross-asset category volatility, with investors reassessing their holdings in currencies, commodities, and stocks, particularly after the U.S. dollar rebound. Another reason for the intensified volatility is the announcement by the leading commodity exchange, the Chicago Mercantile Exchange Group (CME Group), to increase margin requirements for precious metal futures. The raised measures will take effect after Monday’s close, raising the cost of holding positions, forcing traders to put in more funds, and typically having a dampening effect on price and trading activity.
The CME announcement shows that for non-high-risk contracts, the gold margin will increase from 6% to 8%, and high-risk contracts will increase from 6.6% to 8.8%. For silver, non-high-risk contracts will significantly increase from 11% to 15%, and high-risk contracts will increase from 12.1% to 16.5%. The risk-off sentiment in the Asian market has also weighed on precious metals and tech-related stocks, which previously benefitted from the weakening U.S. dollar and hold a considerable portion in Asian benchmark indices.
Charu Chanana, Chief Investment Strategist at Shengbao Singapore, stated: “The news of Kevin Wash’s nomination as the next Federal Reserve Chair is driving the market towards an adjustment in the direction of ‘fewer rate cuts/less rapid’. Wash has always criticized the Fed, advocating that its only mission should be to maintain price stability. They stated that his nomination has led market participants to abandon the ‘dollar depreciation’ narrative, causing a sharp drop in gold, silver, and copper prices after a significant surge in January. The fall in metal prices is now creating a domino effect. Once the metal market shifts to deleveraging, its spillover effect is typical: forced reduction of risk, and ‘selling off liquid assets to raise cash,’ which will also impact the stock market.”
JAMES OOI, Market Strategist at Singapore Tiger Brokers, said: “The selling part of the current stock market is being driven by the sharp drop in gold and silver prices, margin call pressure, Oracle’s $50 billion financing plan, and the overall weakness in the cryptocurrency market. The policy uncertainty surrounding Kevin Wash’s potential appointment as Fed Chair has also added pressure to market sentiment. While he appears to support rate cuts, his inclination to shrink the Fed’s balance sheet position still suggests a tightening financial environment overall.”
Seoul Future Asset Securities Analyst SEO SANG-YOUNG stated, “The commodity market shock triggered by increased volatility in the gold and silver markets has led to margin calls for institutional investors, resulting in a liquidity shock. This has further caused a simultaneous sharp decline in the price of Bitcoin and the stock market. As the previous surge in the domestic market was much faster than in other markets, the subsequent decline has been more severe. While retail investors have not yet faced significant margin calls, the market has entered a state of panic selling, leading to inevitable high levels of short-term market volatility.”
