CME raises margins for gold as prices drop

Gold prices fall more than 5 per cent to lowest in three years, prompting increase in margins for Comex gold

PUBLISHED : Friday, 21 June, 2013, 11:48am
UPDATED : Friday, 21 June, 2013, 11:48am

The CME Group, parent of the Chicago Board of Trade, raised initial margins for Comex gold after prices plunged to their lowest in three years on Thursday.

Gold prices plunged over 5 per cent to the lowest in three years on Thursday, leading a global market rout one day after the US Federal Reserve gave its most explicit signal yet that it plans to wind down the era of easy money.

The exchange operator raised Comex 100 Gold Futures (GC)initial margins for speculators 25 per cent to US$8,800 per contract from US$7,040.

Spot gold hit a low of US$1,276.19 an ounce on Thursday, marking its lowest level since Sept. 21, 2010. US gold hit a low of US$1,275.40.

CME also lifted platinum futures NYMEX (PL) initial margins for speculators by 12.5 per cent to US$3,465 per contract from US$3,080.

Platinum dropped 4.2 per cent to US$1,363.80 an ounce on Thursday. It touched a low of US$1,355.20.

Spot gold was trading up 0.40 per cent at US$1,282.76 and spot platinum was trading up 0.18 per cent at US$1,359 by 2305 GMT.

Margin changes were effective after the close of business on Friday, June 21.

Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature, to an exchange or clearing house to cover the risk of default by that investor and typically are based on the largest most-likely daily market move.