CME Group hikes gold, silver margins again as volatility grips markets

CME Group has again raised margin requirements for gold and silver futures contracts as the world’s largest commodities exchange seeks to mitigate risks associated with heightened volatility in the precious metals market.

Margins are deposits that investors in futures markets pay to an exchange or clearing house to cover the risk of a default. Exchanges typically raise margins to mitigate risks when price volatility in the market increases.

Both initial and maintenance margins for COMEX 100 Gold Futures have been increased to 9% from 8% for Non-Heightened Risk Profile (Non-HRP) accounts, CME Group said on Thursday.

Initial and maintenance margins for COMEX 5000 Silver Futures have been hiked to 18% from 15%.

The rates will be effective after the close of business on Friday, February 6.

Effective January 13, the US exchange operator has been setting margins for gold, silver, platinum and palladium based on a percentage of contract value. The margins were previously based on dollar amounts.

Since the change in margin-setting methodology, CME has so far increased margins three times – on January 30, February 2, and the latest one.

Precious metals have seen wild swings over the last few sessions, with gold and silver posting their steepest losses in decades last Friday after hitting record highs earlier that week.

Spot gold gained 2.6% to $4,894.99 per ounce by 06:01 GMT, after falling to a session low of $4,654.29 earlier on Friday, while silver was 5.5% higher at $75.15, having slumped to a near two-month low of $63.99 earlier.

US gold futures for April delivery gained 0.4% to $4,905.8 per ounce, while silver futures slipped 3% to $74.46.

(By Swati Verma and Noel John; Editing by Subhranshu Sahu)