“CME raised gold margins twice in August. Including the increases that take effect Monday, the margin increases since Aug. 11 total 55%.”
– CME Raises Gold, Silver, Copper Margin Requirements (Wall Street Journal, Sep. 24, 2011):
Exchange operator CME Group Inc. will raise the collateral requirements for trading in gold, copper and silver futures after a volatile week.
Gold margins will be raised by 21%, silver margins by 16%, and copper margins by 18%, effective at the close of trading Monday, CME said in an email after trading closed Friday.
Following the change, speculative investors in the benchmark 100-troy ounce gold contract must put up $11,475 to open a position and maintain $8,500 of that to keep it overnight. Producers and consumers of the precious metal must put up $8,500 to open a position, and the same figure to hold it overnight.
In silver, speculative traders must put up $24,875 to trade a 5,000-ounce contract. The cost to hold a contract overnight was lifted to $18,500.
Copper speculators must post $6,750 to open a contract and $5,000 to hold it overnight.
Exchanges require market participants to post margins to cover potential losses in trading sessions. CME executives have said margin increases typically take place when markets become more volatile.
The gold market swung wildly this month, rising to record intraday highs above $1,900 an ounce Sept. 6, only to dip below the $1,800 mark the following day.
This week, futures collapsed in a rout felt across metals markets as traders liquidated their holdings to raise cash. The most actively traded gold contract fell more than $100 Friday, ending down 5.9% at $1,639.90 a troy ounce.
CME raised gold margins twice in August. Including the increases that take effect Monday, the margin increases since Aug. 11 total 55%.
Silver and copper weren’t spared by this week’s selloff, with both metals falling sharply. Those losses came as some investors worried that demand for industrial metals would crumble because of flagging global economic growth.