T Nation

CME Manipulates Gold Market

For the second time this month, the CME Group Inc., the parent company of the main metals and energy exchanges in the U.S., announced late Wednesday an increase in margin requirements to trade gold. It raised the amount of money needed to trade gold contracts by 27% to $9,450 per 100-ounce contract.

The move comes on the heels of a $104-an-ounce drop in gold futures prices, which some analysts had blamed partly on speculation that the CME would raise margin requirement again.

Goldâ??s approach to $2,000 an ounce â??invited excess speculation and therefore margin concerns for exchanges,â?? said Richard Hastings, a macro strategist at Global Hunter Securities. â??The quasi-exponential price behavior was dangerous and the exchanges today view this with significant concern â?? and act quickly.â??

Brien Lundin, editor of Gold Newsletter, said â??raising margin requirements after a major decline doesnâ??t affect the speculative bulls as much as the bears.â??

â??We may see this move help foster a rebound by forcing shorts to cover,â?? he said.

In electronic trading on Globex, December gold GC1Z was trading $3.70 higher, after closing at $1,757.30 on the Comex division of the New York Mercantile Exchange.

-Myra Saefong

This does nothing but slow it down for a bit. Doesn’t matter what is announced Friday by the FED, if they don’t do QE3 markets crash and people run back to Gold, if he does announce it I expect Gold to fall for a bit then level off before shooting upwords again.