Gold eases from record high after CME margin hike.
Posted: Wed Aug 10, 2011 10:30 pmBy James Regan and Rujun Shen
SYDNEY/SINGAPORE, Aug 11 (Reuters) - Gold eased on Thursday
from record highs hit earlier in the session, after the CME
Group raised margins on COMEX gold futures, while turmoil in the
global financial markets and fears of slower growth will buoy
sentiment.
Spot gold hit an all-time high of $1,813.79, and U.S.
gold GCcv1 rose to a record high of $1,817.6 early in the day.
Both eased after the CME Group said it raised
margins on U.S. gold futures by 22.2 percent, but managed to
stay above $1,800.
"Historically when margins are raised significantly it tends
to cause a bit of sell-off," said Darren Heathcote, head of
trading at Investec Australia.
"We've seen some of it now, but it's difficult to see a
great deal of selling, because we are in very, very volatile and
uncertain times when markets are moving very violently. Gold has
proven too much of an attraction as an alternative investment
and the margins may not have as much influence."
Spot gold eased to $1,801.14 an ounce by 0124 GMT, still up
0.4 percent from the previous close and headed for a fifth
session of consecutive gains. U.S. gold was trading up 1.1
percent at $1,804.00.
The relative strength index for spot gold rose to near 86,
the highest since October 2010, suggesting a heavily overbought
market.
Gold's safe-haven allure has attracted investors fleeing the
risk of debt crisis contagion in Europe and slowing global
growth.
Extreme market turmoil is forcing central banks to shift
their policy. Central banks in Japan and Switzerland said they
would curb the appreciation of their currencies, while the U.S.
Federal Reserve promised to keep rates near zero for at least
two more years.
"With the authorities in both Japan and Switzerland
announcing intentions to intervene to weaken their currencies,
gold remains the last protection against the potential for
widescale money printing as governments seek to recapitalise
their banks and restimulate their economies," UBS said in a
research note.
SYDNEY/SINGAPORE, Aug 11 (Reuters) - Gold eased on Thursday
from record highs hit earlier in the session, after the CME
Group raised margins on COMEX gold futures, while turmoil in the
global financial markets and fears of slower growth will buoy
sentiment.
Spot gold hit an all-time high of $1,813.79, and U.S.
gold GCcv1 rose to a record high of $1,817.6 early in the day.
Both eased after the CME Group said it raised
margins on U.S. gold futures by 22.2 percent, but managed to
stay above $1,800.
"Historically when margins are raised significantly it tends
to cause a bit of sell-off," said Darren Heathcote, head of
trading at Investec Australia.
"We've seen some of it now, but it's difficult to see a
great deal of selling, because we are in very, very volatile and
uncertain times when markets are moving very violently. Gold has
proven too much of an attraction as an alternative investment
and the margins may not have as much influence."
Spot gold eased to $1,801.14 an ounce by 0124 GMT, still up
0.4 percent from the previous close and headed for a fifth
session of consecutive gains. U.S. gold was trading up 1.1
percent at $1,804.00.
The relative strength index for spot gold rose to near 86,
the highest since October 2010, suggesting a heavily overbought
market.
Gold's safe-haven allure has attracted investors fleeing the
risk of debt crisis contagion in Europe and slowing global
growth.
Extreme market turmoil is forcing central banks to shift
their policy. Central banks in Japan and Switzerland said they
would curb the appreciation of their currencies, while the U.S.
Federal Reserve promised to keep rates near zero for at least
two more years.
"With the authorities in both Japan and Switzerland
announcing intentions to intervene to weaken their currencies,
gold remains the last protection against the potential for
widescale money printing as governments seek to recapitalise
their banks and restimulate their economies," UBS said in a
research note.