CME Raises Margin Requirements On Gold, Silver & Copper Futures

The CME Group (CME) on Friday raised margin requirements for some gold, silver and copper futures contracts. The hikes will be effective after the close of business on Monday, according to the exchange operator.

Initial requirements to trade and hold gold’s benchmark contract rose 21% to $11,475 per contract. Meanwhile, maintenance margins climbed to $8,500 from $7,000 per contract.

At the same time, initial requirements for silver rose 16% to $24,975 a contract and maintenance margins increased to $18,500 from $16,000 a contract.

Initial requirements for copper jumped 18% to $6,750 per contract, from $5,738. Also, maintenance margins were increased to $5,000 from $4,250 per contract.

Margin hikes have been blamed by traders for curtailing rallies earlier in the year. This time around, however, CME’s attempt to again dampen speculation comes at a time when market forces are already seemingly at work doing much the same. The SPDR Gold Trust (GLD) slid 9.7% this week and the iShares Silver Trust (SLV) fell by nearly 24%.

According to the latest Lipper data, though, investors have continued to put money into precious metals ETFs. In the week ended Wednesday, the group attracted almost $103 million, a drop-off in activity from previous weeks but still its 12th consecutive week of positive inflows. Those readings of money flows didn’t include the big sell-off in gold and silver at week’s end.

Silver Stages Biggest Drop In 31 Years; Gold Falls Most In 5 Years

Silver futures kept heading down on Friday, finishing with an 18% fall marking the metal’s biggest drop in decades. Meanwhile, the most active gold contract in New York sank 5.9% to register its largest percentage loss since June 2006.

After the dust settled, gold for December delivery lost $101.90 to finish at $1,639.80 an ounce on the day. For the week, the contract dropped 9.7%.

Meanwhile, silver for December delivery slid by $6.48 to settle at $30.10 an ounce. The day’s sell-off represented the metal’s largest one-day dollar decline since early 1980.