By Allen Sykora
A move by CME Group Inc. to allow gold to be used as collateral for margin requirements on all exchange products raises the profile of the metal, but the development probably will not mean a significant increase in demand for physical gold itself, analysts said.
The new global policy became effective Monday in accordance with a member's note issued late Friday, said a CME spokesman in London.
"I guess that would show gold has moved more into an asset class than anybody would have ever thought," said Charles Nedoss, senior account manager and metals analyst with Peak Trading Group.
Sterling Smith, commodity trading advisor and analyst with Country Hedging, called the change a "mild endorsement of gold." And, he said, it might be viewed as effectively another "thump" against the U.S. dollar and paper currencies in general.
However, it won't necessarily mean a fresh influx of demand, observers said.