The Gold-D contract offers physical delivery of the gold at expiry.
Gold brokerage firms expect brisk trading volume of Gold-D, a new gold futures product set to commence trading next Monday, as investor appetite has shifted towards safe haven assets amid rising geopolitical tensions.
MTS Gold Futures Co Ltd and Ausiris Futures Co Ltd share the same view that this latest product of Thailand Futures Exchange (TFEX) could possibly exceed daily trade of 10,000 contracts. Existing gold futures products average 20,000-25,000 contracts per day.
“Investors are seeking safe haven assets, with gold as the safest asset class, because of concerns over rising geopolitical tensions and the possibility of a war between North Korea and the US,” said MTS Gold Futures managing director Nuttapong Hirunyasiri. “We expect the Gold-D product will be popular as the contract size is smaller and it allows Thai investors to access the international gold market.”
Ausiris Futures chief executive Boonlert Siripatvanich concurred, saying Gold-D’s trading volume should in line with 10-baht gold futures weighted 152.44 grammes as Gold-D is simple to trade. It is quoted in US dollars but settled in baht, so it can be used for daily speculation.
Gold-D is a gold futures contract, which is a physical settlement futures contract based on gold bar with 99.99% purity.
Physical delivery is obligated at expiry of the contract. Only physical gold stored in designated vaults appointed by a clearinghouse will be allowed for such physical settlement.
Investors will also have longer access to trading each day. Night trading will begin at 7pm instead of 7.30pm, while the new pre-order session will start from 6.45pm. The closing time will be extended from 10.30pm to 11.55pm.
“The spot gold price jumped to US$1,326 (44,023 baht) on Tuesday and broke the resistance level of $1,300 (43,160 baht) for the third time this year. This confirms an upward trend for the remainder of this year,” said Mr Boonlert.
Gold prices were on the rise following the spot gold market prices hitting a record high twice even before North Korea’s recent missile test, he said.
Ausiris Futures projects the short-term resistance level for gold prices at $1,326 (44,023 baht), with medium-term and long-term resistance levels expected at $1,345 (44,654 baht) and $1,375 (45,650 baht).
The local gold price quoted in the local currency is forecast at 21,000 baht as there is pressure from the weakening dollar against the baht, said Mr Boonlert.
Influential factors affecting gold price movement are the response by the US government towards North Korea, US President Donald Trump’s economic policy, Mr Trump’s threat of a possible US government shutdown related to border wall funding and elections in Europe, he said.
Mr Nuttapong said the market should keep an eye on these influential factors, especially geopolitical tensions, as gold prices will continue rising if the US-North Korean conflict intensifies.
But if tensions de-escalate and the US Federal Reserve hikes rates, then gold prices may decline, he said.