Gold Falls Most in Seven Weeks as Margins Raised, Equities Jump
Gold futures fell the most in seven weeks after CME Group Inc. boosted margins on Comex contracts, prompting investor sales after a three-day rally to a record topping $1,800 an ounce and as equities rebounded.
Wednesday, August 10, 2011, SFGate, San Francisco Chronicle.

That Explains It
This news article by Bloomerg in the San Francisco Chronicle online edition, explained neatly why we had seen gold drop by as much as $60 during the day.
We trust the original authors and publishers will not object to us quoting it here:

Gold Falls Most in Seven Weeks as Margins Raised, Equities Jump
Bloomberg August 10, 2011 04:00 AM
Aug. 11 (Bloomberg) -- Gold futures fell the most in seven weeks after CME Group Inc. boosted margins on Comex contracts, prompting investor sales after a three-day rally to a record topping $1,800 an ounce and as equities rebounded.
CME Group, owner of the world's largest futures market, raised margins on gold contracts by 22 percent. The minimum amount of cash that speculators must keep on deposit for an initial account increased to $7,425 on a 100-ounce contract from $6,075. The Standard & Poor's 500 Index rose as much as 3.2 percent after a drop in U.S. jobless claims.
"The strength in equities, coupled with the increase in margins, is pushing gold down," Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. "Investors are waiting for a deeper correction before they start buying again."
Gold futures for December delivery declined $27.80, or 1.6 percent, to $1,756.50 at 11:35 a.m. on the Comex in New York. A close at the price would mark the biggest drop for a most-active contract since June 23. Earlier, the metal climbed as much as 1.9 percent to a record $1,817.60.
The price jumped 8 percent in the previous three days after S&P cut the U.S. credit rating one level from the top AAA grade on Aug. 5. Before today, gold surged 49 percent in the past year on demand for an investment haven as U.S. and European debt escalated. On Aug. 8, the S&P 500 tumbled to an 11-month low.
'Pullback Welcomed'
"Considering the large price swings in gold this week, it is not altogether surprising that CME has reacted," Edel Tully, an analyst at UBS AG in London, said in a report. "While some corrective price action is very likely for gold, particularly from the fresh longs put on this week, any pullback will be welcomed by investors who have been waiting for a better buying opportunity."
Dennis Gartman, who correctly forecast the slump in commodities in 2008, said he was "surprised" that gold hasn't declined more after the CME announcement.
"This is long overdue, and the CME is correct in having done so," Gartman said in his Suffolk, Virginia-based newsletter.
Gold may rebound on European fiscal woes, Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report.
"Escalating fears over peripheral debt troubles in the euro zone and of a sovereign downgrade on France, with the country's banking sector taking a heavy hit yesterday due to hefty exposure to Italy," may boost demand for gold as a haven, Kryuchenkov said.
Silver futures for September delivery fell $1.052, or 2.7 percent, to $38.275 an ounce in New York.
--With assistance from Phoebe Sedgman in Melbourne. Editors: Patrick McKiernan, Steve Stroth

Normal Reaction
We were looking for the reason that gold has dropped sharply by up to $60 per ounce, although we were not surprised after a number of price rises within a few days. Most dealers and investors expect a correction of some kind.
It is fairly standard for commodity exchanges to increase margins in volatile markets, often simply to readjust to former percentages.
As soon as we had seen this news, which largely explained the sudden drop, we expected gold to continue on upwards.
As we only got time to add this page on 17th August, we can report that we were right, and gold has continued to be strong as expected. As we write this, gold fixed today at over $1,790 setting yet another all-time high record.