Comex Silver Inventory Data

Initial margin for COMEX Gold

CME Group Inc. raised the margin requirements on gold trading at its Comex unit for the second time this month, after prices surged to a record above $1, 900 an ounce and then plunged today by the most since March 2008.

The minimum cash deposit for borrowing from brokers to trade gold futures will rise 27 percent to $9, 450 per 100-ounce contract in the speculative Tier 1 category at the close of trading tomorrow, Chicago-based CME said in a statement. On Aug. 11, the increase by the exchange was 22 percent to $7, 425. The cost of one contract after today’s close was $175, 730. The maintenance margin will rise to $7, 000 from $5, 500.

Comex is making it more expensive for speculators to trade the metal as open interest for gold options climbed to a record 1.263 million contracts on Aug. 18 and prices slumped more than 7 percent in two days, erasing the gain of the past two weeks that sent the metal to a record $1, 917.90 yesterday.

“It will add selling pressure, even after today, ” Frank McGhee, the head dealer at Integrated Brokerage Services said in a telephone interview from Chicago. “This is the exchange reacting to the volatility.”

The CME last raised margins on Aug. 11, when prices fell 1.8 percent, the biggest slump since June 23.

Today, gold futures for December delivery plunged $104, or 5.6 percent, to settle at $1, 757.30, the biggest decline for a most-active contract since March 19, 2008.

Historical Volatility

The 10-day historical volatility for gold jumped to 39.9 percent, the highest since March 2009, data compiled by Bloomberg show.

“There will be a short-term impact on gold prices, ” Savneet Singh, the chief executive officer of New-York based Gold Bullion International, said in a telephone interview. “The long-term fundamentals are intact.”

The precious metal has surged 24 percent in 2011, gaining for an 11th year, as the sovereign-debt crisis and a faltering economy boost demand for the metal as a protection of wealth.

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Popular Q&A

avatar
Why are the initial/ maintenance margin for longer dated futures contracts lower than those for near maturity?

Mine are the same for both brokers I use.
Specifics, details, example, link? Have you compared brokers?

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