June 20, 2013 / 11:36 PM / 4 years ago

UPDATE 1-CME raises margins for gold as prices drop

June 20 (Reuters) - The CME Group Inc, 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 percent to the lowest in three years on Thursday, leading a global market rout one day after the U.S. 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 percent to $8,800 per contract from $7,040.

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

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

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

Spot gold was trading up 0.40 percent at $1,282.76 and spot platinum was trading up 0.18 percent at $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.

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