CME Increases Margins for Gold as Prices Fall Most in 33 YearsDebarati Roy
CME Group Inc. increased the margin requirements on gold trading after prices plunged.
The minimum cash deposit for gold futures will rise 19 percent to $7,040 per 100-ounce contract at the close of trading tomorrow, Chicago-based CME said in a statement. For silver, the minimum cash deposit was raised to $12,375 from $10,450.
The CME’s Comex unit is making it more expensive for speculators to trade after gold fell the most in 33 years today, dropping to the lowest since February 2011, after prices entered a bear market last week. Silver, also in a bear market, slumped 11 percent today and extended the year’s loss to 23 percent.
“A huge collapse of this kind usually sees CME raising margins to minimize volatility and lower speculation,” Michael Smith, the president of T&K Futures & Options Inc. in Port St. Lucie, Florida, said in a telephone interview.
Gold futures for June delivery slumped 9.3 percent to settle at $1,361.10 in New York, the biggest drop for a most-active contract since March 17, 1980. Prices reached $1,335.10 in after-hours electronic trading, the lowest since Feb. 3, 2011.
Estimated trading on all gold contracts was 702,957 contracts today, topping the previous record of 486,315 contracts reached on Nov. 28.
The metal’s three-month implied volatility, a gauge for future price swings, touched 51.09, the highest since September 2011.
CME also raised margins for platinum and palladium.