NEW YORK — A commodities slump ripped through global markets Monday after President Donald Trump nominated former Federal Reserve governor Kevin Warsh to lead the U.S. central bank and CME Group raised margin requirements for gold and silver futures. The one-two punch lifted the dollar and forced traders to unwind leveraged metal bets, turning last week’s rally into a violent selloff. The slide spread from precious metals into oil and industrial metals before U.S. stock trading began, Feb. 2, 2026.
Commodities slump deepens as metals rout forces deleveraging
Gold traded near $4,776 an ounce, down about 2% after an intraday drop that approached 10%, extending Friday’s 9.8% plunge — its sharpest one-day fall since 1983 — according to Reuters market reporting. Silver whipsawed in the same session, briefly tumbling about 15% before stabilizing near $84 an ounce; it was about 33% below last week’s record high near $122.
Selling accelerated as traders digested margin changes posted in a CME Clearing performance bond advisory. The notice showed requirements rising to 8% of contract value for key gold futures from 6%, and to 15% for benchmark silver futures from 11%, effective after Monday’s market close. Futures are inherently leveraged, so higher margins raise the cash needed to hold a position; when prices are already falling, that can trigger margin calls and force additional liquidation.
The shock broadened into a commodities slump across energy and industrial metals. Oil dropped nearly 5% and London Metal Exchange copper fell about 3% as investors took risk off the table and demand worries resurfaced ahead of China’s Lunar New Year break. “The key question is whether this marks the start of a structural downturn in commodity prices or merely a correction,” Commonwealth Bank of Australia commodities strategist Vivek Dhar said in remarks carried by Reuters. The report also pointed to signs of easing U.S.-Iran tensions as a fresh weight on crude, and high inventories as a headwind for base metals.
Markets were recalibrating the interest-rate outlook after Trump’s nomination of Warsh as Federal Reserve chair. Warsh is expected to replace Jerome Powell when Powell’s term ends in May, pending Senate confirmation. Even before any policy shift, investors read the pick as a potentially more hawkish tilt at the central bank, reinforcing “higher for longer” rate thinking that typically supports the dollar and pressures nonyielding assets such as gold.
Margin calls have magnified price breaks before
This commodities slump has a familiar mechanical echo. In 2011, CME raised silver margins five times in eight days — an 84% jump in trading costs — helping provoke a steep selloff, Reuters reported at the time. After gold’s 2013 crash, LBMA’s “After the Gold Crash” described how a sharp, fast decline reshaped demand and drew physical buying toward discounted prices, even as financial investors reduced exposure.
Whether the commodities slump becomes something longer-lasting may hinge on what comes next: if volatility cools after the CME changes take effect and whether the Fed transition becomes a steadier, more predictable process. For now, the selloff looks less like a sudden collapse in physical demand and more like a rapid unwind of leverage — the kind of move that can overshoot before it stabilizes.
