Gold and silver continue to be in focus after last week’s violent sell-off. On February 1, 2026, MCX Gold April 02, 2026 contract was trading at Rs 1,39,900, down 8.17%, while MCX Silver March 05, 2026 contract traded at Rs 2,65,652, down 9%. MCX opens for a special Sunday trading session, with markets bracing for fresh cues on price direction. The session coincides with the presentation of the Union Budget 2026, adding to the uncertainty around how the two metals will trade after silver logged its worst single-day fall since 1980. Commenting on the sharp slide, many market experts raised concerns about the margin mechanics.
Deepak Shenoy, CEO, Capitalmind AMC and Nithin Kamath, Founder & CEO, Zerodha, pointed to leverage and margin mechanics after gold and silver suffered a sharp, one-day collapse that locked contracts at lower circuits and forced exchanges to step in.
Prices that were hovering near record levels just a day earlier dropped sharply, pulling silver back to the Rs 2.9 lakh per kg zone and gold to around Rs 1.49 lakh per 10 grams, resetting market expectations almost overnight.
Gold, silver margin- What’s the current rate
Silver fell as much as 30%, gold dropped 15%, and losses spread across base metals at the same time. With margins rising after the fall, traders and brokers were left dealing with cash demands far greater than what was required to enter those positions.
Exchanges moved quickly after the rout. According to Bloomberg, CME Group said margins for gold futures will rise to 8% of the contract value from 6% for non-heightened risk profiles, while margins for heightened risk profiles will increase to 8.8% from 6.6%.
Silver margins will be raised to 15% from 11% for non-heightened risk profiles, with heightened risk margins moving to 16.5% from 12.1%. The exchange also said margins for platinum and palladium futures will be increased. The changes will take effect from Monday’s close and follow what CME described as a routine review of market volatility to ensure adequate collateral coverage.
Deepak Shenoy on how leverage turns into a cash crunch
Market commentator and CEO, Capitalmind AMC, Deepak Shenoy, said the episode showed how quickly low starting margins can turn into heavy pay-ins when volatility spikes. In a post on X, he explained how commodities allow large exposure with relatively little capital at the outset.
“Leverage in commodities is crazy. Most exchanges will take just 10% or less as margin, so to get exposure of 1cr you may only need 10L. But when volatility goes up, margins go up too, like currently silver is at 30% margin. So a player long silver – a lot of 30kgs is at 1 cr exposure – might have started with a smaller margin of say 10-15 lakh… And after yesterday has to pay 30 lakh in market-to-market losses and an increased margin of another 15-20Lakh. Some of it might be a past profit sitting there, but there will be some sort of large payment required, much more than the initial margin required.”
Shenoy warned that traders who pushed exposure to the limit were hit hardest, and that unpaid obligations would spill over to brokers.
“Some people think that they can max their exposure by taking two lots with just a 20 lakh margin, and in such times they get hosed. And then if they don’t pay, the broker has to pay and later collect from the customer. This is tail risk, and it hurts any leveraged player much more than if people reduced leverage.”
He added that balance sheet strength determines who survives steep moves.
“Someone with 50 lakh in the bank taking a 1.cr exposure will hurt but not go bankrupt in a steep 30% fall, but someone with 15L will. Beware of the leverage you take. Like larry hite says If you don’t bet you can’t win. If you lose all your chips, you can’t bet.”
Nithin Kamath on circuit locks and margin failure
From the brokerage side, Zerodha founder Nithin Kamath said there are rare sessions when normal safeguards stop working because prices move too far, too fast. Writing on X, Kamath said the commodity markets had one of those days.
“As a broker, there are rare days when risk management simply doesn’t work, when markets move so violently that traders lose more than their entire initial margin. When this happens, both the trader and the broker are sitting ducks with no way out. Yesterday was one of those days in commodity markets. All major metals hit lower circuits—the maximum they can move in a day. Silver crashed 30%, Gold 15%, and others followed. Btw, Natural gas was on an upper circuit.”
Kamath said he had seen a similar breakdown only once before, when crude oil prices turned negative during COVID, and warned that such moves are not limited to commodities.
“What happened in commodities yesterday can happen in equities too; we saw it in 2008. The lesson is simple but critical: only trade with money you can afford to lose. You can trade successfully for a decade and lose it all in a single day if you’re not properly managing risk. There’s no margin call, no exit opportunity when markets gap through circuits like this.”
Along with his post, Kamath shared an image showing the breadth of the selloff across MCX contracts. Aluminium and copper were down more than 7%, nickel fell close to 9%, and zinc and lead were also sharply lower. Crude oil slipped around 2%, while natural gas moved the other way, gaining about 11%. The most severe damage was in precious metals, with gold futures falling the full 15% allowed for the day and silver futures dropping as much as 27%, dragging mini and micro contracts down by around 24% as well.
Conclusion
The gold and silver crash showed how quickly leverage can turn against market participants when contracts lock and volatility spikes in one direction. With higher margins now in place, the episode has laid bare how stress moves from traders to brokers and then to exchanges when exposure is built on thin capital and markets move faster than risk controls can respond.