CME Group is once again increasing gold and silver margins as market volatility increases

CME Group has again increased margin requirements for gold and silver futures contracts as the world’s largest commodities exchange seeks to limit risks associated with increased 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 default. Exchanges typically increase margins to limit risk when price volatility increases in the market.

Both initial and maintenance margins for COMEX 100 Gold Futures have been increased from 8% to 9% for Non-Heightened Risk Profile (Non-HRP) accounts, CME Group said Thursday.Initial and maintenance margins for COMEX 5000 Silver Futures have been increased from 15% to 18%.

The rates will come into effect after hours on Friday, February 6.

As of January 13, the US exchange operator has set margins for gold, silver, platinum and palladium based on a percentage of the contract value. Margins were previously based on dollar amounts.

Since the change in margin setting methodology, CME has increased margins three times so far: on January 30, February 2 and the last time. Precious metals have seen wild swings over the past few sessions, with gold and silver posting their biggest losses in decades last Friday after hitting record highs earlier that week.

Spot gold rose 2.6% to $4,894.99 an ounce by 0601 GMT, after falling to a session low of $4,654.29 earlier on Friday, while silver was 5.5% higher at $75.15, after falling to a near two-month low of $63.99 earlier. [GOL/]

U.S. gold futures for April delivery rose 0.4% to $4,905.8 an ounce, while silver futures fell 3% to $74.46.