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Gold Drops as COMEX Boosts Margin Requirements, Grains Rise

August 12, 2011 at 0:26 by Vladimir Vyun

Gold futures retreated from the record, showing the biggest drop in 7 weeks, after COMEX boosted margin requirements. CME Group Inc. (owner of COMEX) increased margin required to trade gold contracts by 22 percent. As a result, traders liquidated their positions en masse. The situation reminds the one with the silver earlier this year, when the increase of margin requirement put an end to the impressive rally of silver and caused a hit to the precious metal, from which it still hasn’t recovered. Gold looks too strong to fall in a same way. Moreover, the margin increase occurred when the yellow metal had a clearly bullish trend, while silver was caught by the CME decision during a correction. Still, caution is advised. December futures for gold delivery fell $32.80 (1.8 percent) to $1,751.50 by 13:39 on COMEX.

Corn, soybeans and wheat gained today as the US Department of Agriculture cut its forecast for harvest. The USDA decreased its estimates compared to July predictions because of excessively hot weather in parts of the US. Estimates for corn were lowered by 4.1 percent, for soybeans by 5.2 percent and for spring harvest of wheat by 5.2 percent. December futures for delivery of corn rose $0.255 (3.7 percent) to $7.14 per bushel as of 13:40 on CBoT. November futures for delivery of soybeans gained $0.3025 (2.3 percent) to $13.3175 per bushel. Contract for delivery of wheat in December advanced $0.1375 (1.9 percent) to $7.33.

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