The precious metals market, including gold and silver, has continued its stellar performance from last year into 2026, consistently setting new record highs.
Since the end of last year, the CME Group has raised margin requirements for precious metals three times. However, as prices surged relentlessly, the exchange intervened again on January 12th to curb frenzied speculation. This move was not a simple margin hike but a complete overhaul of the trading rules. The CME decided to change the margin calculation for gold, silver, platinum, and palladium from a fixed amount to a percentage of the contract's notional value, effective after the close on January 13th. This introduces an automatic adjustment mechanism: higher precious metal prices will directly lead to higher margin requirements, potentially triggering more frequent margin calls for traders and even forcing liquidations.
Specifically for gold, prior to this adjustment, the fixed margin for some futures contracts was $24,000. After the change, with the margin rate set at 5%, the initial margin for one contract (100 ounces) would be calculated as $4600/oz * 100 * 5% = $23,000, slightly lower than the previous level. However, if the gold price continues to climb, the margin requirement will also rise accordingly.
For silver, the fixed margin for some contracts was previously $32,500. Post-adjustment, with a margin rate of 9%, the initial margin for one contract (5,000 ounces) becomes $86/oz * 5000 * 9% = $38,700, significantly higher than before.
Despite the rule change, investors appeared unfazed, with silver prices breaking above $88 and gold holding firmly above $4600 in early Wednesday trading. However, historical trends suggest that when exchanges frequently intervene to deleverage the market, the party may be nearing its end.
The price of Bitcoin broke through the $95,000 mark, reaching a two-month high. Strategy, the publicly listed company holding the most Bitcoin globally, purchased 13,627 Bitcoins in January, valued at approximately $1.25 billion. This represents the company's largest acquisition since last July, and the total market value of its Bitcoin holdings is now estimated to exceed $60 billion. This news spurred a rally in cryptocurrency prices, with the company's stock also rising by 6%.
US December CPI held steady at 2.7%, with core CPI unchanged at 2.6%, largely in line with expectations and offering little room for the Federal Reserve to initiate rate cuts. Following the data release, interest rate markets priced in a 97% probability of no change in January, helping the US dollar recover its Tuesday losses and maintain an upward trend.
News suggesting Japan might hold a snap election in February reinforced expectations for continued loose fiscal policy, pushing the USD/JPY pair above the 159 level to a new 18-month high. The Nikkei index jumped 3.1% to refresh its historical peak. Overnight, the three major US stock indices collectively closed lower.
WTI crude oil rose for a fourth consecutive day, breaking above $61, driven by concerns over potential disruptions to Iranian oil supply. OPEC is scheduled to release its monthly market report today.
The CME's latest margin rule adjustment implies that margin requirements will not exceed pre-adjustment levels until gold futures prices reach $4800, which essentially gives a green light for gold's continued ascent.
From a technical perspective, gold maintains its upward trajectory from the start of the year. Support around the 4570 level could aid further gains, though the 4628/40 zone may temporarily cap the upside. On pullbacks, as long as the price holds above 4550, opportunities for buying on dips remain viable.
However, given the exchange's frequent interventions to reduce leverage, traders need to closely monitor potential shifts or even reversals in market sentiment.
After breaking through the key resistance at $94,500, Bitcoin has preliminarily completed a two-month-long basing pattern, turning market sentiment cautiously optimistic. Short-term overbought correction risks warrant attention. If the price can sustain above the $94,000-$95,000 area, it could oscillate higher to challenge the $98,000 level, which corresponds to the 38.2% Fibonacci retracement of the October-November decline.
