Gold declined from a record after CME Group Inc. (CME) boosted margins on futures contracts, prompting some investors to sell the metal after a three-day rally. CME, the world’s largest futures market, raised margins on gold contracts by 22 percent, according to a statement on its website. The initial-margin requirement, or the minimum amount of cash speculators must keep on deposit, will rise to $7,425 per contract from $6,075, CME said. The margin for hedging will gain 22 percent, rising to $5,500 from $4,500, the CME said. “Considering the large price swings in gold this week, it is not altogether surprising that CME has reacted,” Edel Tully, an analyst at UBS AG in London, wrote in a report today. “While some corrective price action is very likely for gold, particularly from the fresh longs put on this week, any pullback will be welcomed by investors who have been waiting for a better buying opportunity.” Gold futures for December delivery declined $7.70, or 0.4 percent, to $1,776.60 by 6:47 a.m., after earlier today touching an all-time high of $1,817.60 on the Comex in New York. Bullion for immediate delivery dropped $17.40, or 1 percent, to $1,775.65 an ounce in London, after earlier today reaching a record $1,814.95 The price has gained 9.2 percent this month, after Standard & Poor’s cut the U.S. credit rating one level from the top AAA grade on Aug. 5. Gold rose to $1,786 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,772 at yesterday’s afternoon fixing. Economist Dennis Gartman, who correctly forecast the slump in commodities in 2008, said today he’s “surprised” that gold hasn’t declined more after the CME raised margins. Bull Trend “This is long overdue and the CME is correct in having done so,” Gartman said in his daily newsletter. “We are rather surprised that gold has not sold off markedly on that news, and we are left to conclude either that gold’s bull trend is truly stronger than we might wish to believe or that the news has not yet hit the markets and will have its effect later this morning when the U.S. traders reach their desks.” The increased margins may give some traders pause before investing in the metal, Phillip Futures analysts including Ong Yi Ling wrote in a note. “Bullish sentiments could be tempered in the short term as margin requirements to trade gold have been raised,” Ling said in the note. “As the costs of trading increases, some investors could be prompted to pare bullish bets.” Gold prices may be “rangebound” today as investors who are using the metal as a haven investment underpin futures, said Andrey Kryuchenkov, an analyst at VTB Capital in London. Peripheral Debt “Escalating fears over peripheral debt troubles in the euro zone and of a sovereign downgrade on France, with the country’s banking sector taking a heavy hit yesterday due to hefty exposure to Italy” may boost demand for gold, Kryuchenkov said. Spot platinum climbed for a third day, gaining as much as 1.1 percent to $1,789.75 an ounce. Cash palladium advanced 0.9 percent to $734.50 an ounce, while silver fell 0.9 percent to $38.91 an ounce. To contact the reporters for this story: Tony C. Dreibus in London at tdreibus@bloomberg.net, or Glenys Sim in Singapore at gsim4@bloomberg.net. To contact the editor responsible for this story: Claudia Carpenter at ccarpenter@bloomberg.net.

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