By Claudia Assis and Chris Oliver, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures traded lower Friday, extending the previous session’s fall to a second day after the main U.S. metals-exchange operator increased the money needed to trade the metal.
Gold for December delivery GC1Z -1.01% lost $17.30, or 1%, to $1,734 an ounce an ounce on the Comex division of the New York Mercantile Exchange.
Gold had pared some of its losses after consumer-sentiment data, but it proved to be a short-lived respite. The metal’s decline accelerated as U.S. stocks climbed.
The University of Michigan-Reuters index tumbled to 54.9 in August, the lowest since May 1980, from 63.7 in July.
During the regular U.S. session, the contract settled down $32.80, or 1.8%, at $1,751.50 per ounce. The lower settlement snapped a three-day winning streak that took gold to an intraday record of $1,801 an ounce.
The “downside move was bound to happen after three straight sessions of consecutive gains ... the (CME Group Inc.) decision to hike margins on gold futures certainly played a vital part here as smaller market participants rushed to square their books,” analysts at VTB Capital in London wrote in a note to clients.
“Bullion remains well underpinned in the short term, with very limited downside. Uncertainties over the global economic recovery are still rife, as are fears of peripheral debt troubles in the Eurozone,” they added.
Other metals, more closely linked with industrial uses, took some strength from rising U.S. equities, often a barometer of economic conditions.
Silver futures traded higher, undoing some of their overnight drop, with the September contract SI1U -0.20% up 21 cents, or 0.5%, to $38.83 an ounce. The contract retreated 1.7% the previous session.
September copper HG1U +0.01% added 1 cent, or 0.8%, to $4.02 a pound.
Initial margin requirements to trade gold rose 22% to $7,425 per 100-ounce contract, from $6,075. Maintenance margins increased 18% to $5,500 from $4,500, CME said. See report on CME margin hike.
The CME has increased gold margins twice in 2011, and has decreased them once earlier this year.
