Gold and Silver Crash After Record Highs: What Triggered the Sharp Sell-Off?

In India, gold and silver futures hit lower circuit levels, while global prices recorded their steepest single-day declines in decades, marking one of the most abrupt reversals in precious metals in recent history.

Gold & Silver From Record Highs to Free Fall

The correction followed months of relentless gains. Gold had surged to nearly ₹1.83 lakh per 10 grams, while silver touched an unprecedented ₹4.04 lakh per kg. However, within days, gold futures slipped to around ₹40,000 per 10 grams, while silver plunged by over ₹1.5 lakh per kg, reflecting panic-driven unwinding of long positions.

Globally, spot gold fell more than 20% in the last 3 days from its all time high, while silver saw an even steeper fall of around 40%.

What Triggered the Sharp Sell-Off?

Profit Booking and Forced Liquidation Dominate Trade

The primary trigger behind the crash was aggressive profit booking after the multi-month rally left prices stretched. As prices began to fall, highly leveraged positions were forced to unwind, accelerating the decline.

Silver, which had seen heavy speculative participation, suffered deeper losses as traders rushed to cut exposure amid rising volatility. The speed of the fall suggested that margin calls and automated selling played a major role in amplifying the downside.

CME Margin Hike Added Fuel to the Sell-Off

Adding further pressure, CME Group raised margin requirements for gold, silver, platinum, and palladium futures following the sharp overnight sell-off. While the margin hike came as part of a routine volatility review, it acted as an amplifier rather than the original trigger.

For gold, margins were raised to 8% from 6% for non-heightened risk profiles, while silver margins jumped sharply to 15% from 11%. Higher margins made it more expensive to hold futures positions, forcing smaller and leveraged traders to either add collateral or exit positions, deepening the correction.

Who is CME?
CME Group is the world's leading and largest derivatives marketplace, operating major exchanges (CME, CBOT, NYMEX, COMEX) where traders buy/sell futures and options on interest rates, equity indexes, foreign exchange, energy, and agricultural products. It provides a central venue for risk management, price discovery, and trading, largely via the CME Globex electronic platform.

US Dollar Strength and Fed Uncertainty Weigh on Bullion

Global macro factors also contributed to the crash. A stronger US dollar and rising bond yields weighed on non-yielding assets like gold and silver. Market sentiment turned cautious after President Donald Trump nominated Kevin Warsh as the next US Federal Reserve Chair.

Warsh is perceived as less inclined toward aggressive rate cuts, raising concerns that the easy monetary conditions priced into bullion markets may not materialize as quickly as expected. This shift in rate expectations triggered a sharp reassessment of bullish bets.

What Lies Ahead for Gold and Silver?

In the near term, gold and silver prices are expected to remain volatile as markets digest tighter trading conditions, evolving US monetary policy expectations, and shifting risk sentiment. Any further strengthening of the dollar or rise in yields could keep pressure on bullion, while long-term investors may view sharp dips as opportunities rather than a signal of trend exhaustion.