Tonight, will the U.S. stock market opening continue to be under pressure? "Rate Cut Slowdown" Expectations Trigger Precious Metal Margin Crisis, Analysts Warn of Market Entering "Sell-off Liquidity" Spiral

February 2, 2026 – Sharp swings in precious metal prices have wiped out 2026’s strongest rally, raising the risk of heavy selling pressure on global equities (Japanese and South Korean stocks already faced pressure in Asian trading). Gold plunged 10% at one point on Monday, while silver (SI=F) dropped more than 15%. As of press time, both metals have pared losses, but the broad market selloff has investors bracing for continued pressure on U.S. stocks when they open. ETF outflows are also dragging the crypto market lower. Malaya Bank Securities’ Tareck Horchani noted that former President Trump’s nomination of Kevin Wash as Federal Reserve Chair has sparked cross-asset volatility, as investors reassess positions in currencies, commodities, and stocks—especially after the U.S. dollar rebounded. Volatility has intensified further following the Chicago Mercantile Exchange Group (CME Group), a leading commodity exchange, announcing higher margin requirements for precious metal futures. The hikes, effective post-Monday’s close, raise position-holding costs, forcing traders to post more capital and typically dampening prices and trading activity. Per CME’s announcement: For non-high-risk gold contracts, margins will rise from 6% to 8%; high-risk contracts will jump from 6.6% to 8.8%. For silver, non-high-risk margins will surge from 11% to 15%, while high-risk contracts will climb from 12.1% to 16.5%. Risk-off sentiment in Asian markets has also weighed on precious metals and tech stocks—assets that previously benefited from a weaker dollar and hold heavy weight in Asian benchmark indices. Shengbao Singapore (Saxo Singapore) Chief Investment Strategist Charu Chanana said: “Kevin Wash’s nomination as the next Fed Chair is pushing markets toward a ‘fewer/shallower rate cuts’ adjustment. A long-time Fed critic, Wash argues the central bank’s sole mission should be price stability. His pick has led investors to abandon the ‘dollar depreciation’ narrative, triggering sharp drops in gold, silver, and copper after their strong January rally. The metal selloff is now creating a domino effect: Once the metal market shifts to deleveraging, the typical spillover is forced risk reduction and ‘selling liquid assets to raise cash’—a dynamic that will hit stocks too.” Singapore Tiger Brokers Market Strategist James Ooi added: “Current equity selling is driven by gold/silver’s sharp drop, margin call pressure, Oracle’s $50 billion financing plan, and broad crypto weakness. Policy uncertainty around Wash’s potential Fed appointment is also weighing on sentiment. While he seems open to rate cuts, his inclination to shrink the Fed’s balance sheet still points to an overall tighter financial environment.” Seoul Future Asset Securities Analyst Seo Sang-young noted: “The commodity market shock from gold/silver volatility has triggered margin calls for institutional investors, sparking a liquidity crunch. This has further pushed Bitcoin and stocks sharply lower simultaneously. Since the domestic market’s previous surge outpaced other regions, the subsequent decline has been more severe. While retail investors haven’t faced major margin calls yet, the market has entered panic-selling mode, ensuring elevated short-term volatility.”