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UPDATE 1-CME hikes gold margins by 27 pct
August 24, 2011 / 9:37 PM / in 6 years

UPDATE 1-CME hikes gold margins by 27 pct

* Margins on trading COMEX 100 futures raised

* Increase of 27 pct biggest since Jan 2009

* Maintenance margins now $7,000 from $5,500 a contract

(Updates with details, prices)

By Antonita Devotta

BANGALORE, Aug 24 (Reuters) - The CME Group (CME.O) on Wednesday raised margins on gold futures by about 27 percent, the biggest hike in more than two and a half years and the second increase in a month.

The margin increase came as gold futures fell more than $100 on Wednesday in one of the steepest falls ever, as strong U.S. economic data and expectations of more Federal Reserve stimulus accelerated profit taking from the safe-haven’s record high on Tuesday.

The hike in maintenance margins, typical in times of market turbulence, coincided with the liquidation of gold futures by investors anticipating a third round of government bond buying, or quantitative easing.

The exchange operator raised maintenance margins on COMEX 100 Gold Futures GCv1 for speculators to $7,000 per contract from $5,500, effective after the close of business on Thursday.

On Aug 10, the CME raised trading margins on gold futures by 22 percent to $5,500 per contract, following panic buying amid the S&P downgrade of the U.S. credit rating and euro-zone debt worries.

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History of gold margin changes: [nN1E77N1Y6]

Silver, oil margin changes: [ID:nSGE749012] [ID:nN1097997]

Gold in different currencies: r.reuters.com/wun62s

CME hike announcement: link.reuters.com/fyk43s

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U.S. gold futures for December delivery GCZ1 settled down $104 at $1,757.30 an ounce. By 5:16 EDT (2116 GMT), they were trading at $1,754.0.

Spot gold XAU= was down 4.1 percent to $1,754.59 an ounce by 3:37 p.m. EDT (1937 GMT), off its session low of $1,749.39. Before gold began recoiling Tuesday from above $1,900, it had risen nearly 9 percent over six sessions.

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. (Reporting by Antonita Devotta, Editing by Bob Burgdorfer)

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