Shanghai raises margin for gold forward contracts to 12%
Source: Bloomberg News |
August 24, 2011, Wednesday
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Print Edition
Print Edition
THE Shanghai Gold Exchange, China's largest spot market for the precious metal, will increase margin by 1 percentage point, joining other bourses in an effort to curb volatility after prices gained to a record.
The requirement will be lifted to 12 percent from 11 percent for forward contracts from settlement tomorrow, the bourse said in a statement posted on its website yesterday. The maximum daily price move will be hiked to 9 percent from 7 percent, it said. Margins and commissions on silver contracts may also be increased if volatility gains, it said.
Gold for immediate delivery rose to an all-time high above US$1,910 an ounce yesterday as investors sought to protect their wealth against financial turmoil amid speculation that the global economy is slowing. CME Group Inc, the world's largest futures market, raised the margins on gold contracts by 22 percent from August 11 after prices surged.
"The Shanghai exchange's move to raise margin requirements and cap daily price volatility is modeled after the CME's similar move, and out of its need to control risks," Wei Chishan, a precious metals analyst at Shanghai Metals Market, said yesterday.
Bullion for immediate delivery rose as much as 0.8 percent to US$1,913.50 an ounce in Singapore. The metal is up 17 percent in August, heading for its best monthly performance since 1982. The deferred-delivery contract in Shanghai added 0.5 percent to a record 391.90 yuan (US$61) a gram and has risen 17 percent in the past month.
China's gold investment demand surged 44 percent in the second quarter from a year ago, as rising inflation boosted the metal's appeal as a haven asset and amid a lack of other investment options, the World Gold Council said last Thursday. Buying of gold coins and bars rose to 53 metric tons in the three months ended June 30, the second-largest after India, it said.
The metal is gaining for an 11th year, rising 34 percent, as holdings in exchange-traded products hit a record on August 8 and central banks add to their reserves for the first time in a generation.
Gold may hit US$2,000 by December 31, according to a median forecast.
The requirement will be lifted to 12 percent from 11 percent for forward contracts from settlement tomorrow, the bourse said in a statement posted on its website yesterday. The maximum daily price move will be hiked to 9 percent from 7 percent, it said. Margins and commissions on silver contracts may also be increased if volatility gains, it said.
Gold for immediate delivery rose to an all-time high above US$1,910 an ounce yesterday as investors sought to protect their wealth against financial turmoil amid speculation that the global economy is slowing. CME Group Inc, the world's largest futures market, raised the margins on gold contracts by 22 percent from August 11 after prices surged.
"The Shanghai exchange's move to raise margin requirements and cap daily price volatility is modeled after the CME's similar move, and out of its need to control risks," Wei Chishan, a precious metals analyst at Shanghai Metals Market, said yesterday.
Bullion for immediate delivery rose as much as 0.8 percent to US$1,913.50 an ounce in Singapore. The metal is up 17 percent in August, heading for its best monthly performance since 1982. The deferred-delivery contract in Shanghai added 0.5 percent to a record 391.90 yuan (US$61) a gram and has risen 17 percent in the past month.
China's gold investment demand surged 44 percent in the second quarter from a year ago, as rising inflation boosted the metal's appeal as a haven asset and amid a lack of other investment options, the World Gold Council said last Thursday. Buying of gold coins and bars rose to 53 metric tons in the three months ended June 30, the second-largest after India, it said.
The metal is gaining for an 11th year, rising 34 percent, as holdings in exchange-traded products hit a record on August 8 and central banks add to their reserves for the first time in a generation.
Gold may hit US$2,000 by December 31, according to a median forecast.
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