Silver also recoups some of previous session’s 6.9% loss
By Myra P. Saefong and Chris Oliver, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures traded modestly higher, Friday after tallying a two-session loss of $62 an ounce, with investors split between a dash for cash and rush for the relative safety of the precious metal.
“Massive uncertainty, counter-party and systemic risk” have led some speculators and fund managers to opt out of the paper or leveraged gold market and move to cash, analysts at GoldCore said in a note to clients Friday.
“Some are also moving into the safety of physical bullion” they said.
Gold for December delivery GC1Z +0.36% rose $5, or 0.3%, to $1,724.80 an ounce on the Comex division of the New York Mercantile Exchange, trading between a low of $1,711.40 and high of $1,738.50.
Prices have tallied a loss of 3.4% over the past two sessions.
U.S. stock markets are looking a bit shaky in early dealings, said Chintan Karnani, chief analyst at Insignia Consultants in New Delhi. Also, the “euro seems to be unable to hold on to [its] gains.”
“The weekend elections in Spain implies that traders will prefer to short the euro-U.S. dollar instead of being long,” he said. And the day’s “movement in commodities and equity markets also suggest that investors are preferring to sit on cash.”
The Dow Jones Industrial Average DJIA +0.34% was up 0.2%. The euro, meanwhile, traded at $1.3522, inching up from $1.3458 in North American trading late Thursday. Read more on currencies action.
In order for gold prices to rise, U.S. stock markets will also need to rise, Karnani said. On a technical basis, the failure of Comex gold to break and trade over $1,741 during the session may result in a fall to $1,705 and $1,686, he added.
Gold appeared unfazed by data showing that the risk of recession has receded. The Conference Board on Friday reported that its index of leading economic indicators grew 0.9% in October, the largest growth since February.
Other metals traded higher Friday, with silver leading the pack.
December silver SI1Z +1.96% added 38 cents, or 1.2%, to $31.88 an ounce.
December copper HG1Z +0.44% traded at $3.40 a pound, up 2 cents, or 0.5%. January platinum PL2F +0.81% tacked on $10.60, or 0.7%, to $1,591.70 an ounce and palladium for December delivery rose $2.55, or 0.4%, to $606.25 an ounce.
China ups silver margin
The leading Chinese precious metals exchange on Friday increased its silver margin requirements to a fresh high amid heightened volatility in precious metals.
The Shanghai Gold Exchange lifted silver margin requirements to 18% of a contract’s value, from 15% previously, according to data provided by ScotiaMocca, the metals unit of Scotia Capital.
It’s not clear when the new margin requirements come into effect, but a report by Reuters said it would likely be from Monday.
Reuters also reported that the margins would change further if price swings breach daily trade limits on Friday.
Brokers said the margin changes would affect Shanghai retail investors who have margin trading accounts.
The new margin is “extraordinarily high — it’s higher than most other exchanges,” said ScotiaMocatta managing director Sunil Kashyap in Hong Kong.
He said the hikes appeared intended to prevent sharp losses among small traders.
“It’s a continuing reaction to the problems that took place earlier this year in May and April and when there was extreme volatility in silver,” said Kashyap. “The exchange is a little bit skittish that we may have further volatility.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
