Amid extreme volatility in precious metals, the Multi Commodity Exchange of India has announced a sharp increase in margin requirements for gold, silver, platinum and palladium futures, a move that will take effect from Monday’s close.
In a statement issued on Friday, the exchange said margins for gold futures will be raised to 8% of the value of the underlying contract, up from the current 6%, for traders classified under the non-heightened risk profile. For those under the heightened risk category, margins will increase to 8.8% from 6.6%.
Margins on silver futures, which witnessed one of their steepest single-session declines in decades, will see an even sharper hike. For the non-heightened risk profile, silver margins will rise to 15% from 11%, while traders in the heightened risk category will now need to post 16.5%, up from 12.1%.
The exchange also confirmed that platinum and palladium futures margins will be increased, though specific percentages were not immediately detailed.
Review triggered by volatility, not price direction
MCX said the margin revision follows a “normal review of market volatility to ensure adequate collateral coverage,” underscoring that such changes are not uncommon during periods of sharp price movements—whether upward or downward.
Friday’s decision comes on the back of unprecedented turbulence in global and domestic precious metals markets. Gold futures on MCX slid sharply after a historic global sell-off, while silver crashed by over 20% intraday, marking one of the largest single-day falls on record.
Earlier in the week, the exchange had already raised margins for silver, platinum and palladium following steep price surges, highlighting how rapidly risk parameters have shifted in recent sessions.
Higher collateral raises trading threshold
The margin hike means traders will now need to deploy significantly more capital to hold or initiate futures positions. While this strengthens risk management and reduces systemic exposure, it also raises the entry barrier for smaller and highly leveraged participants.
Market participants note that during episodes of extreme volatility, such measures—though procedural—can accelerate the exit of undercapitalised traders, further thinning liquidity in the near term.
A market adjusting to shock
The sharp margin increase follows a week marked by violent price swings, circuit triggers, and global spillovers from overseas markets. While the exchange has framed the move as part of routine risk calibration, it reflects the scale of uncertainty currently gripping commodity markets.
With precious metals still reacting to global monetary signals, currency movements, and forced unwinds, traders are bracing for continued volatility even as risk controls tighten.
Disclaimer: Margin changes are based on internal risk assessments and market conditions. While volatility is a key factor, no single measure or event can be viewed as the sole driver behind exchange actions or market outcomes.
