CME Group announced another increase in margin requirements to trade gold

Gold turned sharply lower Thursday morning as risk aversion continued to subside in financial markets. CME Group announced another increase in margin requirements to trade gold after the market close on Wednesday. The exchange raised initial margin requirements rose to $9,450 from $7,425 per 100-ounce contract, and maintenance margin requirements to $7,000 from $5,500. The margin increases go into effect as of the close of trading on Thursday. CME last raised gold margin requirements two weeks ago. This factor contributing to the decline in the gold price below $1,800 per ounce.

TD Securities went on to say that “A shake out in the bull trend would not be entirely unexpected even if a move lower from current levels would fall a little short of the mid $1,900 area we had thought reachable as part of this move. But this market has priors and the lesson of the last few months is that corrections tend to shallow and short-lived.”

If a meaningful gold price correction ensues, the firm forecasted that “there will be good support in the $1,800/$1,810 area but below here, the market may drop back to the $1,700/$1,750 area.” Lastly, it stated that “We would need a lot more evidence – and subsequent confirmation – to call a technical end to this rally at the moment.”