* CME raises Comex 5000 Silver Futures margins by 17.9%
* U.S. commodities regulator monitoring silver markets
activity
(Adds comments, updates prices)
By Sumita Layek
Feb 2 (Reuters) - Silver dropped more than 5% on Tuesday,
retreating from a near eight-year peak in the previous session,
as a margin hike by the Chicago Mercantile Exchange called a
halt to the latest leg of the social media-driven GameStop
frenzy on financial markets.
Spot silver XAG= slipped 4.8% to $27.59 an ounce by 0811
GMT, after jumping 7.3% to hit its highest since February 2013
at $30.03 on Monday, as the pack of small-time investors shifted
into the market following calls on Reddit and other platforms.
CME Group CME.O raised Comex 5000 Silver Futures
maintenance margins by 17.9% on Monday and posts on the
WallStreetBets Reddit forum at the centre of the past week's
action argued for traders to steer clear of the metal.
L1N2K800V
"(Higher margins) will temper the buying frenzy and we could
see prices drop as much as to $26 in the next two weeks. It's
also triggering some profit booking," said Vincent Tie, sales
manager at Silver Bullion.
Raising the margins investors must post to trade is a
familiar move by CME, the world's biggest futures and
commodities-centric market, when it aims to head off unusual
market stress and volatility.
It follows similar moves to cap the market action by some of
the easy access online platforms who were the main conduits for
the recent surge in videogame retailer GameStop GME.N and
other U.S. stocks.
Spot gold XAU= fell 0.8% to $1,846.04 per ounce. U.S. gold
futures GCv1 shed 0.7% to $1,850.10.
Platinum XPT= declined 2.5% to $1,099, while palladium
XPD= was steady at $2,246.23.
"As the reality dawns that some of the stories surrounding
silver were not really true, the recent froth in the market
could come down," said Harshal Barot, a senior research
consultant for South Asia at Metals Focus, but added: "Expect
volatility to continue."
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.
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Social media buzz pushes silver above
other precious metals https://tmsnrt.rs/3apK5Ft
Social media buzz pushes silver above
other precious metals https://tmsnrt.rs/2YDsUKZ
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