Gold Steady After Sell-Off; CME Margin Hike Weighs

By: Reuters

Gold held steady on Thursday after a sharp drop in prices in the previous session as investors ditched safe-haven assets, while a margin hike in COMEX gold may further weigh on sentiment. 

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Spot gold [XAU=  1739.49    -11.06  (-0.63%)   ]traded little changed at $1,748.99 an ounce by 2357 GMT, after posting its worst daily decline since December 2008 with a 4.3-percent drop on Wednesday.

U.S. gold [GCCV1  1755.00    -2.30  (-0.13%)   ]edged down 0.2 percent to $1,753.  

Amid market turbulence, the CME Group raised margin requirement on COMEX gold futures by 27 percent, the biggest hike in more than two and a half years and the second increase in the month.

New orders for long-lasting U.S. manufactured goods rose in July, offering hope the ailing economy could dodge a second recession even though a gauge of business spending fell and encouraging risk appetite in the financial market.

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Government bonds also fell sharply, together with gold, as investors withdrew from a broad range of safe-haven assets, while global stock markets posted solid gains for a second day on Wednesday.

SPDR Gold Trust [GLD  171.646    -6.024  (-3.39%)  ] said on Wednesday its holdings fell 2.2 pct, in its biggest one-day drop in seven months.

U.S. stocks posted strong gains for a second day on Wednesday as investors jumped back into beaten-down financial shares and backed away from safer assets like gold in volatile trading.

The dollar index [.DXY  74.06    0.05  (+0.07%)   ] held steady on Thursday, after rising against major currencies in the previous session, as investors await signal on stimulus from the U.S. Federal Reserve Chairman Ben Bernanke at Friday's Jackson Hole meeting.

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