Precious metals volatility intensifies, CME introduces new rule: margin tied to nominal value percentage.

The Chicago Mercantile Exchange (CME Group) announced that it will change the margin setting method for gold, silver, platinum, and palladium futures contracts, following the surge in precious metal prices and increased trading volatility. In a notice, CME stated that the new method will set margins based on a percentage of the nominal value. Previously, margins were set based on fixed dollar amounts. CME said that this change, effective after Tuesday's close, is a "normal assessment of market volatility, aimed at ensuring sufficient collateral coverage." In recent quarters, the precious metals market has experienced unusually strong upward trends, with price swings and volatility continuing into the new year. In the recent uptrend, both gold and silver hit record highs in Monday's trading, with silver having risen by about one-fifth within 2026. Christopher Wong, a strategist at Oversea-Chinese Banking Corporation, said that the short-term adjustment of margin rules "may temporarily pressure precious metals." Wong added: "Intuitively, a percentage-based method can better reflect the required level of margin, meaning less frequent adjustments." However, he also pointed out that if volatility exceeds historical levels, or if unforeseen circumstances arise, "CME may still raise the percentage." With the acceleration of precious metal trends, speculative trading activities on the rise, and volatility surging, CME has adjusted the margin requirements for its precious metal contracts several times last year. Clearinghouses like CME require brokers to deposit cash (margin) daily to cover potential losses on their client positions. CME stated on its official website that margins "help ensure that clearing members can fulfill their obligations to their clients and to CME Clearing." The recent surge in metal prices has been driven by multiple factors, including concerns about the weakening US dollar, the prospect of further interest rate cuts in the US, and the independence of the Federal Reserve. At the same time, speculation in the market suggests that silver may face import tariffs in the US, making it favored.