CME Group has once again increased trading margins, causing a collective plunge in precious metals, with silver dropping more than 6%.

wallstreetcn· Dec 31, 2025 13:44

CME Group announced on December 30 that margins for gold, silver, platinum, and palladium contracts would be raised after Wednesday's close. This decision was based on an assessment of 'market volatility to ensure adequate collateral coverage.' This marks the second such measure taken by the exchange within a week, with the previous increase having taken effect on Monday.

The margin increase means traders will need to provide more collateral when trading precious metals futures, directly limiting the use of leverage in the market. This regulatory move has raised investor caution, prompting concerns over whether the recent rally in precious metals can be sustained.

For the second time this week, CME Group raised margin requirements for precious metals futures in an effort to cool the recently surging precious metals market. On Wednesday,$XAG/USD (XAGUSD.FX)$prices fell sharply, nearing the $71 mark, with intraday losses exceeding 6%. Other precious metals also dropped significantly,$Palladium Futures (MAR6) (PAmain.US)$with declines surpassing 10%, trading at $1,543 per ounce. Spot platinum plunged over 12%, reaching $1,968 per ounce.

CME Group announced on December 30 that margins for gold, silver, platinum, and palladium contracts would be increased after Wednesday's close. The decision was made based on an evaluation of 'market volatility to ensure adequate collateral coverage.'

Precious metals prices experienced sharp fluctuations this week, creating historic movements throughout the year. Silver price volatility was particularly severe, with futures surging to a record high above $82 per ounce early Monday morning before experiencing a significant pullback.

This increase in margin requirements means that traders need to provide more collateral when trading precious metals futures. The previous increase in margin requirements took effect on Monday.

CME Group announced on December 30 that margins for gold, silver, platinum, and palladium contracts would be raised after Wednesday's close. This decision was based on an assessment of 'market volatility to ensure adequate collateral coverage.' This marks the second such measure taken by the exchange within a week, with the previous increase having taken effect on Monday.

The margin increase means traders will need to provide more collateral when trading precious metals futures, directly limiting the use of leverage in the market. This regulatory move has raised investor caution, prompting concerns over whether the recent rally in precious metals can be sustained.

Analysts noted that while long-term bullish factors exist, the rapid rise in the short term has clearly overextended expectations, with capital 'front-running' leading to heightened speculative sentiment.

Exchanges intensify efforts to control risks.

The CME Group has adjusted margin requirements multiple times this month. On December 12, the exchange first raised silver margins by 10%. Subsequently, after the close on December 29, it again comprehensively increased the performance bond margins for metal futures such as gold, silver, and lithium.

These measures reflect the exchange's concerns about the sharp volatility in the precious metals market this week. Silver price fluctuations were particularly pronounced, with futures surging to a record high above $82 per ounce during early trading on Monday, followed by a significant pullback, resulting in double-digit percentage swings.

Domestic regulators have also taken synchronized actions. On December 26, the Shanghai Futures Exchange adjusted the daily price limit for gold and silver futures contracts to 15% and correspondingly increased trading margin requirements. This marks the third round of risk-control measures introduced by SHFE for silver futures this month, following an increase in margin requirements on December 10 and restrictions on intraday position limits along with fee adjustments on December 22.

Market-wide precious metals frenzy raises alarms

Silver prices reached a historic high above $82 per ounce on Monday, but this 'metal mania' is not limited to silver. Gold has breached $4,550, copper prices have hit new records following the rise in SHFE copper, and both platinum and palladium have recorded double-digit gains. The market is increasingly treating precious metals as a hedge against 'AI bubble' risks and currency depreciation.

However, historical precedents have sounded warning bells for the current market. The failures of the Hunt Brothers' cornering attempt in 1980 and the silver crash in 2011 indicate that when exchanges begin imposing leverage restrictions, it often signals the nearing end of the rally.

The current trajectory of silver prices bears a striking resemblance to the period just before the bubble burst in 2011. After the 2008 financial crisis, the Federal Reserve implemented zero interest rate policies and quantitative easing, driving silver from $8.50 to $50 within two years, a surge of 500%. However, the CME Group raised margin requirements five times in nine days, forcing massive deleveraging in the futures market, causing silver prices to plummet nearly 30% within weeks, leading to a prolonged bear market.

An even more famous case is the Hunt Brothers' cornering incident in 1980. The three brothers hoarded over 200 million ounces of silver to hedge against inflation, using leverage to push prices from $1.50 in 1973 to nearly $50 in 1980. The CME subsequently enacted 'Silver Rule 7' to strictly limit leverage, while Fed Chairman Volcker raised interest rates to 20%. Under the dual pressures of margin calls and broken funding chains, the Hunt Brothers were forced to liquidate their positions and declare bankruptcy, sending silver prices crashing to $10.

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