Gold prices slump 3% on stock bounce, margin hike

NEW YORK: Gold recoiled after tapping a new record on Thursday, heading for its largest daily loss in over a year as an equities rebound and higher trading margins fanned profit-taking from the biggest rally since 2008.

Prices slumped nearly 3 per cent and fell over $80 from their overnight peak in one of the biggest daily swings ever. Yet analysts showed no sign of revising their bullish view of gold, up nearly 20 per cent since June as investors seek safer havens amid global debt crises and a darker economic outlook.

Concerns of a deepening European crisis and the possibility of distress among French banks helped propel gold to a record $1,813.79 an ounce in Asian trading. And while equity investors swooped in to scoop up bargain stocks on Thursday, underlying worries are unlikely to disappear soon, analysts said.

Traders said steeper margin requirements also would not stop gold's long-term advance. Late on Wednesday, the CME Group Inc raised margin requirements for 100-ounce gold futures by 22 per cent, the biggest rise in about 1-1/2 years and the first such rise since January.

"Once again, gold's decline is indicative of a sell-off of safe-haven assets, more of a risk-on type trade today," said David Meger, director of metals trading at commodity broker Vision Financial Markets in Chicago. 

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