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Gold futures ease off 2-week low amid Fed uncertainty

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Forexpros - Gold futures eased off a two-week low on Thursday, paring sharp losses suffered after the CME Group raised margins on gold contracts by the most in over two years and amid uncertainty ahead of a speech by Federal Reserve Chairman Ben Bernanke on Friday.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,741.65 a troy ounce during U.S. morning trade, falling 1.25%.

It earlier fell as much as 3.3% to trade at USD1,701.85 a troy ounce, the lowest price since August 8.

Gold prices are down almost 11% since surging to a record high of USD1,917.90 a troy ounce on August 23, the biggest three-day slump since December 2008.

The CME Group, operator of the Comex raised the amount of cash that traders must deposit for speculative positions for the second time in two weeks, it announced late Wednesday.

The CME increased the so-called initial margin by 27% to USD9,450 per 100-ounce contract from USD7,425, pushing small investors out of the gold market as it raises the cost to trade a futures contract.

The margin for hedging will increase 22% to USD7,000 from USD5,500 per contract, effective as of the close of trading on Thursday.

Gold futures sank as much as 5% in the two days following the last CME margin hike on August 11.

Meanwhile, investors waited to see if Fed Chair Bernanke will indicate that the central bank is contemplating a third round of monetary stimulus measures in an effort to prop up the faltering U.S. economic recovery.

"As expectations of what Fed Chairman Bernanke can say at Jackson Hole tomorrow are scaled back, gold should be one of the assets that reacts most," UBS said in a report earlier in the day.

"But there is also a positive aspect to this, in that gold appears to have already discounted disappointment at Jackson Hole."

Elsewhere on the Comex, silver for September jumped 1.25% to trade at USD40.23 a troy ounce, while copper for September delivery rallied 1.41% to trade USD4.069 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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