CME Raised (Again) Margins on Gold and Silver Contracts– Sep 24

Following the sharp falls in the precious metals prices, there was another news item that helped gold and silver prices to fall the flight of stairs: the CME (Chicago Mercantile Exchange) announced it will raise margins on gold and silver contracts again.

The CME (Chicago Mercantile Exchange), the world’s largest future market, announced it will raise the maintenance margins requirements from $7,000 to $8,500 for trading gold contracts – an increase of 21%. For silver, the maintenance margins requirements and the initial-margin requirement inclined from $16,000 to $18,500 – a 15% increase.

Furthermore, the initial-margin requirement, or the minimum amount of cash that speculators must keep on deposit, will also incline from $9,450 per 100-ounce contract to $11,475.  This is the third time in the past couple of months in which CME raised margins: it raised margins twice in August; the last time was back in August 25th by 27%. On August 24th, gold price shed 5.59% of its value, and silver price declined by 7.39%.

This decision is likely to be one of the prime reasons for the ongoing freefall in gold price despite the slight recovery in other financial markets such as US stock markets. Coming Monday, this decision may continue to affect gold and silver traders.


For more on this subject: