* CME raises Comex 5000 Silver Futures margins by 17.9%
* Silver hasn’t topped out just yet-analyst
* U.S. commodities regulator monitoring silver markets
activity
(Updates prices)
By Sumita Layek
Feb 2 (Reuters) – Silver dropped more than 2% on Tuesday,
retreating from a near eight-year peak it hit in the previous
session, as a margin hike by the Chicago Mercantile Exchange
prompted investors to lock in profits.
Spot silver slipped 1.6% to $28.52 an ounce by 0535
GMT, after jumping 7.3% to hit its highest since February 2013
at $30.03 on Monday, as retail investors piled into the market
following calls on social media to push prices up. CME Group raised Comex 5000 Silver Futures
maintenance margins by 17.9% on Monday. CME’s steps to increase margins on silver trading and
discourage the highly speculative behaviour in the market has
prompted some profit taking, said IG Market analyst Kyle Rodda.
Margins are deposits mandated by exchanges to mitigate
default risks while investors trade in futures markets. They are
typically raised at times of price volatility.
The retail frenzy that started last week has left global
dealers scrambling for bars and coins to meet demand, while also
pushing the U.S. Commodities regulator to monitor the market. The fact that silver moved up without similar spikes in
other precious and industrial metals “suggests that it’s an
outlier of sorts and therefore vulnerable to come down quite
strongly”, said ED&F Man Capital Markets analyst Edward Meir,
but added it hasn’t topped out just yet.
Prices also came under pressure after some Reddit members
pleaded individual traders to avoid the trade as there are no
holders of massive silver short positions.
Analysts expect prices to remain volatile in the near term. “It’s just wild market behaviour with a low level of
predictability,” Rodda said.
Spot gold dipped 0.2% to $1,855.76 per ounce. U.S.
gold futures shed 0.4% to $1,856.90.
Platinum declined 1.5% at $1,110.77, while palladium added 0.3% to $2,253.03.
(Reporting by Sumita Layek in Bengaluru; Editing by Krishna
Chandra Eluri and Rashmi Aich)
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