Tonight, will the US stock market opening continue to be under pressure? "Rate Cut Pause" Expectations Trigger Precious Metal Margin Crisis, Analyst Warns Market Entering "Sell-off Liquidity" Spiral

BlockBeats News, February 2nd. Recently, the prices of precious metals have experienced intense volatility, erasing the strongest gains of 2026, which has led to the possibility of significant sell-offs in the stock market (the Japanese and South Korean stock markets have already come under pressure during the Asian trading session). On Monday, the price of gold dropped by 10% at one point, while silver (SI=F) fell by over 15%. As of the time of writing, the declines in both have narrowed, but the widespread market downturn has made investors worried that the U.S. stock market will continue to be under pressure after opening, and that ETF sell-offs will cause further declines in the crypto market.

Tareck Horchani of Malaya Bank Securities stated that Trump's nomination of the Fed Chair has triggered cross-asset class volatility. Investors are reevaluating their holdings of currencies, commodities, and stocks, especially after the U.S. dollar rebounded. Another reason for the intensified volatility is that the leading commodity exchange, the Chicago Mercantile Exchange Group (CME Group), announced an increase in margin requirements for precious metals futures. The upward adjustment will take effect after Monday's close, increasing the cost of holding positions, forcing traders to inject more funds, and typically having a dampening effect on prices and trading activity.

The CME announcement shows that for non-high-risk contracts, the gold margin will increase from 6% to 8%, and high-risk contracts will increase from 6.6% to 8.8%. As for silver, non-high-risk contracts will see a significant increase from 11% to 15%, and high-risk contracts will increase from 12.1% to 16.5%. The risk-off sentiment in the Asian markets has also weighed on precious metals and tech-related stocks, which had previously benefited from a weaker U.S. dollar and had a relatively large share in Asian benchmark indices.

Charu Chanana, Chief Investment Strategist at Shengbao Singapore, said: "The news of Kevin Wash's nomination as the next Fed Chair is pushing the market towards a direction of 'fewer rate cuts/slower pace.' Wash has consistently criticized the Fed, advocating that it should have only one mission: maintaining price stability. They stated that his nomination has prompted market participants to abandon the narrative of 'dollar depreciation,' leading to a sharp decline in gold, silver, and copper prices after a significant increase in January. The pullback in metal prices is creating a domino effect. Once the metal market shifts towards deleveraging, the spillover effect is typical: forced risk reduction and 'selling liquid assets to raise cash,' which will also impact the stock market."

James Ooi, Market Strategist at Singapore Tiger Brokers, stated: "The selling pressure in the current stock market is partly driven by the sharp fall in gold and silver prices, margin call pressure, Oracle's $500 billion financing plan, and the overall weakness in the cryptocurrency market. The policy uncertainty surrounding Kevin Wash's potential appointment as Fed Chair has also put pressure on market sentiment. Although he seems to support rate cuts, he tends towards reducing the Fed's balance sheet position, overall indicating that the financial environment will tighten."

Seoul Future Asset Securities Analyst SEO SANG-YOUNG said, "The commodity market shock caused by increased volatility in the gold and silver markets has led to institutional investors facing margin calls, which has escalated into a liquidity crisis. This has further triggered a simultaneous sharp decline in the price of Bitcoin and the stock market. Since the previous rapid rise in the domestic market far outpaced other markets, the subsequent drop has been more severe. Although retail investors have not yet faced widespread margin calls, the market has plunged into panic selling, inevitably maintaining high levels of market volatility in the short term."