* CME Increases Comex 5000 Silver Futures Margins by 17.9%
* Silver is not the best yet – analyst
* US Commodity Regulator Monitoring Silver Market Activity (Prices of Updates) By Sumita Layek February 2 (Reuters) – Silver fell more than 2% on Tuesday and retreated from an eight-year high it achieved in the previous session as a margin increase of the Chicago Mercantile Exchange forced investors to include profits. Spot silver fell 1.6% to $ 28.52 per ounce at 0535 GMT after rising 7.3% on Monday, hitting a high of $ 30.03 since February 2013, while retail investors piled up the market after calls on social media to raise prices. CME Group increased the margins of Comex 5000 Silver Futures by 17.9% on Monday. CME’s steps to increase margins on silver trading and discourage highly speculative behavior in the market have led to profit-taking, said IG Market analyst Kyle Rodda.
Margins are deposits required by exchanges to reduce default risks while investors trade in futures markets. It is usually increased during times of volatility. The retail frenzy that began last week has left global traders puzzled over pubs and coins to meet demand, while also pushing the US commodity regulator to monitor the market. The fact that silver has moved up without similar increases in other precious and industrial metals indicates that it is an outlier and therefore vulnerable to falling quite strongly ‘, said Edward Meir, analyst at ED&F Man Capital Markets, but said it’s not the best right now. Prices have also come under pressure after some Reddit members pleaded with individual traders to avoid trading as there are no holders of massive silver short positions. Analysts expect prices to remain volatile in the short term. “It’s just wild market behavior with a low level of predictability,” Rodda said. Spot gold fell 0.2% to $ 1,855.76 per ounce. US gold futures fell 0.4% to $ 1,856.90. Platinum decreased 1.5% to $ 1,110.77, while palladium added 0.3% to $ 2,253.03. (Reported by Sumita Layek in Bengaluru; edited by Krishna Chandra Eluri and Rashmi Aich)
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