CME Raises Futures Margin as Gold and Silver Prices Swing Sharply
The precious metals market has experienced extreme volatility over the past several trading sessions, including on Friday (Feb 6). Gold and silver prices recorded their steepest daily declines in decades, after previously touching record-high levels.
In response to the heightened market turbulence, CME Group has once again raised margin requirements for gold and silver futures contracts. The move aims to mitigate risk amid sharp price fluctuations in the precious metals market.
Margin refers to the collateral funds that futures investors must deposit with exchanges or clearing houses to guard against default risk. Exchanges typically increase margin requirements when price movements become excessively volatile.
Under the latest adjustment, COMEX 100 Gold Futures saw both initial and maintenance margins raised to 9% for accounts classified as Non-Heightened Risk Profile (Non-HRP). Meanwhile, COMEX 5000 Silver Futures had their initial and maintenance margins increased to 18%.
CME has also revised its margin calculation methodology for precious metals futures. Margins are now set as a percentage of contract value, replacing the previous system that used fixed dollar amounts.
Since implementing the new methodology, CME has raised margin requirements three times, underscoring the intense volatility pressure currently gripping the global gold and silver markets.
