Gold steady after record highs

The gold price looked steady on Friday following a volatile session that saw the yellow metal surge to a new record before suddenly succumbing to a sell-off.

Charles Leishman, chief trader at Standard Bank, said gold hit a record high due to its safe-haven qualities amid continued geopolitical turmoil in the Middle East and north Africa, and the development in Japan.

Leishman said Japan experienced two more earthquakes yesterday, highlighting the challenges the Asian giant still faced.

Concurring, London-based analysts FastMarkets noted on Friday that the bullion prices rallied on Thursday with gold setting a record high and silver a new 31-year peak as the mix of Middle Eastern and north African instability, Japanese radiation concerns and euro-zone debt prompted further safe-haven investment.

On Thursday, gold traded to a high of $1,447.75 per ounce, but the move was capped as heavy selling emerged ahead of $1,450/oz.

By 11:33 local time on Friday, gold stood at $1,433.58/oz.

Leishman said the CME Group on Thursday raised margin requirements - the amount that an investor must deposit in a margin account before buying on margin or selling short - on silver futures, sparking a sell-off in silver contracts.

This silver sell-off prompted gold to fall sharply. Gold and silver tend to move in tandem. When gold touched a high of $1,447.75, silver rose to $38.16.

The CME Group owns and operates derivatives and futures exchanges in Chicago and New York City.

Leishman said higher margins made it expensive to hold silver futures positions.

However, FastMarket said the volatile news background continued to support gold and silver prices and suggested further gains in the coming sessions, with gold to erode resistance at around $1,450 and silver to extend towards $40-$41.

(Source: http://www.iol.co.za/business/markets/commodities/gold-steady-after-record-highs-1.1047266)