The Multi Commodity Exchange (MCX) and National Stock Exchange (NSE) have reversed earlier decisions, withdrawing additional margins imposed on gold and silver futures contracts effective February 19, 2026. This move lowers the capital required for traders, potentially boosting liquidity and retail participation. However, the underlying leverage inherent in futures trading, coupled with ongoing global macroeconomic uncertainties and geopolitical tensions, means substantial risks remain for market participants. Despite reduced entry costs, disciplined risk management is paramount as price swings can rapidly amplify losses.
The Catalyst: Margin Reversal on Bullion Futures
Effective February 19, 2026, both the Multi Commodity Exchange of India (MCX) and the National Stock Exchange (NSE) have withdrawn the additional margins previously levied on gold and silver futures contracts. MCX has removed an extra 3% margin on gold and 7% on silver, while NSE Clearing has similarly rolled back its additional margin requirements. This decision follows recent significant price corrections in both precious metals, with gold reportedly down nearly 20% from its peak and silver experiencing a substantial sell-off. The removal of these extra layers of collateral aims to reduce the upfront capital needed by traders, thereby improving capital efficiency and potentially stimulating market activity. Current spot prices for gold hover around $4,980 per ounce, while silver is trading near $78 per ounce [2, 4]. On the MCX, April gold futures are priced near ₹1,55,600 per 10 grams, and March silver futures are around ₹2,44,400 per kilogram [46, 48].
The Risk Reset: Volatility's Shadow Persists
These exchanges had initially imposed higher margins earlier in February 2026 and previously in October 2025 [3, 7, 41, 43] as a risk containment measure following periods of sharp price volatility. The recent surge in gold and silver prices in January 2026, with gains exceeding 24% for gold and 60% for silver, was followed by a dramatic correction in early February [24]. This period saw significant price swings, including silver's over 35% single-day drop and gold's more than 12% decline on January 30th [23]. The Chicago Mercantile Exchange (CME) had aggressively increased its own margin requirements during this volatile phase, raising gold margins from 6% to 8% and silver from 11% to 15% [9, 16, 40]. These hikes are designed to mitigate systemic risk by requiring more collateral, but they can also accelerate price declines by forcing leveraged traders to liquidate positions [5, 23, 32, 34]. While MCX and NSE are now easing these requirements, the underlying risks associated with leverage remain. The nomination of Kevin Warsh as the next Federal Reserve Chair, perceived as hawkish, has influenced monetary policy expectations and strengthened the US dollar, contributing to the recent market turbulence [8, 32, 40]. Persistent geopolitical tensions also continue to drive safe-haven demand for precious metals [13, 33].
Competitive & Regulatory Landscape
The regulatory framework in India, overseen by SEBI, mandates exchanges like MCX and NSE to manage market risks dynamically. The decision by MCX and NSE to roll back additional margins reflects a response to the cooling volatility after recent sharp price corrections [3, 7]. This contrasts with the CME's more sustained approach of increasing margins during periods of heightened price discovery [5, 9, 25]. While the immediate capital outlay for traders has decreased on Indian exchanges, the global regulatory environment, including the CFTC in the US, continuously adapts to market complexities and technological advancements, aiming for transparency and investor protection [30, 42]. The regulatory push for percentage-based margins by exchanges like CME means that as prices rise, capital requirements automatically increase, potentially making leveraged trading more expensive during bull runs [38].
Outlook Amidst Uncertainty
Despite the recent price reset, longer-term forecasts for precious metals remain cautiously optimistic. Analysts at JP Morgan project gold could reach $6,300 per ounce by the end of 2026, supported by factors including central bank buying and ongoing geopolitical uncertainties [8, 14]. Bank of America has forecasted silver to trade between $135 and $309 for the same period, driven significantly by robust industrial demand in sectors like solar and electronics [14]. While diplomatic efforts to ease geopolitical tensions could temper safe-haven demand, the broader macro picture, including inflation concerns and the Federal Reserve's monetary policy path, is expected to continue influencing gold and silver prices. The reduction in margins by MCX and NSE may well stimulate participation, but traders must remain acutely aware that lower entry costs do not diminish the amplified risks inherent in leveraged futures trading, especially given the volatile macro-economic backdrop.
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