CME raises margins on Gold, Silver after record overnight sell-off

CME Group is increasing margins on Comex gold and silver futures after rates suffered their biggest declines in decades.

Gold margins will increase to 8% of value of underlying contract from the present 6% for non-heightened risk profile, the exchange said on Friday.

It added that the heightened risk profile margins would rise to 8.8% from the present 6.6^.

Silver margins will increase to 15% from the present 11% for the non-heightened risk profile. Meanwhile, the heightened risk profile margins will witness a hike to 16.5% from the present 12.1%, as per the statement.

Platinum and palladium futures’ margin also will be boosted.

Also Read: Silver Price Crash Explained — Three factors that triggered the 37% plunge on Friday

The change takes effect from Monday’s close and follows a “normal review of market volatility to ensure adequate collateral coverage,” it said.

The increase means those who want to trade futures of gold, silver, platinum and palladium will need to put up more collateral to ensure they can meet their obligations. While the exchange routinely raises margins when a contract is soaring, sliding or extremely volatile, Friday’s move could further edge out smaller players who don’t have enough cash to make the necessary deposits.

Earlier this week, the exchange hiked margins for silver, platinum and palladium futures following price surges.

With inputs from Bloomberg

Also Read: Gold prices see biggest single-day plunge since the 1980s, takes mining stocks with it