As of Friday, US traders will have to provide higher collateral in trading in gold and silver futures. After the strong rise in gold prices, this encourages profit-taking.
Gold margins are rising
The operator of the US commodity futures exchange COMEX, the CME Group, is increasing the gold margins at the close of trading on Thursday. This means that higher security must be proven in trading in gold futures. Anyone entering into a standard 100 ounce futures contract will have to deposit $ 5,500 per contract in the future (initial margin). If the contracts are held for more than one day (maintenance margin), the trader must provide $ 5,000 per contract as security (previously $ 4,500). In both cases, the margin increases by 11 percent.
This means that all gold futures traders who are currently holding a position have to inject capital. In the current market environment, this could force profit-taking and put the gold price under pressure. The last margin adjustment was made in August 2019. At that time, the CME Group (the COMEX operator) raised the margins by 12.5 percent. And: The silver margins will also be raised. They each increase by 5.7 percent – the maintenance margin from $ 5,200 to $ 5,500 per 5,000-ounce contract.
Gold price under pressure
Yesterday, the gold price came back significantly after US President Donald Trump’s Iranian speech. While gold prices reached $ 1,611 an ounce on the night of Wednesday after the Iranian attack on Iraqi positions, the precious metal closed at $ 1,557 in the evening. Calculated in the common currency, the gold price fell from the daily and record highs of 1,443 euros to 1,402 euros. Since the beginning of the year there has been a 3.7 percent increase in the share price.