PRECIOUS-Silver drops from 8-year peak as stellar rally loses steam - Reuters

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    * CME raises Comex 5000 Silver Futures margins by 17.9%
    * Silver hasn't topped out just yet-analyst
    * U.S. commodities regulator monitoring silver markets
activity

 (Adds comments, details, updates prices)
    By Sumita Layek
    Feb 2 (Reuters) - Silver prices dropped nearly 2% on
Tuesday, as investors locked in profits after the precious metal
touched a near eight-year peak in the previous session.
    Spot silver        slipped 1.5% to $28.54 an ounce by 0257
GMT, after jumping 7.3% to hit its highest since February 2013
at $30.03 on Monday, as retail investors piled into the market
following calls on social media in an attempt to push prices up.
            
    The Chicago Mercantile Exchange's steps to increase margins
on silver trading, and discourage the highly speculative
behaviour in the market has prompted some profit taking, said IG
Market analyst Kyle Rodda.
    CME Group Inc         on Monday raised Comex 5000 Silver
Futures margins by 17.9% to $16,500 per contract from $14,000
for February.                        
    Margins are deposits mandated by exchanges to mitigate
default risks while investors trade in futures markets and they
are typically raised at times of price volatility.
    The retail frenzy that started last week has left dealers
from the United States to Singapore scrambling for bars and
coins to meet demand, while also prompting the U.S. Commodity
Futures Trading Commission to closely 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,
adding, it hasn't, however, topped out just yet.
    Despite the lack of fundamentals for prices to move up,
experts say the retail interest can continue to push the market
higher in the near term.
    "It's just wild market behaviour with a low level of
predictability. So, even fundamentals and technicals almost go
out of the window," Rodda said.
    Spot gold        was steady at $1,860.36 per ounce. U.S.
gold futures        shed 0.1% to $1,861.90.
    Platinum        declined 1% at $1,115.86, while palladium
       added 0.4% to $2,254.98.

 (Reporting by Sumita Layek in Bengaluru; Editing by Krishna
Chandra Eluri and Rashmi Aich)
  

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