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Foreign Exchange

FX news: CFTC examine metals

The chairman of US Commodity Futures Trading Commission (CFTC), Gary Gensler, announced Tuesday that the CFTC will be holding a public meeting on March 25 to examine the trading of futures and options in the precious and base metals markets.

In the past, the CFTC has changed margin requirements when they felt that these measures would calm positioning.

Gensler said: “Next month’s meeting will be part of our ongoing look into how the Commission regulates futures and options markets on commodities of finite supply.

“We look forward to again hearing from interested members of the public on the important metals markets.”

Gold has always been a safe haven because of its portability and as a hedge against inflation. If the CFTC lowers the margin level, that will force customers out of positions and back into USD – strengthening the USD.

As one trader told the weeklyFiX: “Over the last few years gold has appreciated dramatically, but we think most of this move has been fuelled by leveraged accounts.

“The CFTC would say that lowering leverage would protect the smaller investor, but we think it would fuel short-term volatility as people would have to close positions in what would be a one-way street.

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