Gold Futures Regain Popularity in Thailand

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Gold futures in Thailand are regaining popularity as investor confidence in the precious metal increases. The price of gold has increased 20% this year, causing a boom in Thailand’s gold future contracts.

Data from the Thailand Future Exchange (TFEX) through June 9 points to 9,859 contracts traded daily on metal futures. This is a level last seen in 2012 and accounts for 4.1% of TFEX’s total. TFEX suspended all silver futures in July 2014, leading to paper gold contracts being the only metal products on the TFEX.

Gold futures have two contract types: 10-baht weight and 50-baht weight.

Metal futures hit record highs on the exchange in 2011, with an average of 16,679 contracts traded per day. The contracts in 2011 accounted for 40.1% of all traded contracts on the exchange. The average daily contracts fell to 6,015 last year, accounting for just 3% of the exchange’s total trading volume.

Gold prices peaked at US$1,923 an ounce in 2011 before quickly receding to $1,061 by the end of 2015 following the first interest rate hike in the United States in nearly a decade.

Capital markets were volatile at the start of 2016, causing many investors to flock to safe haven assets, including gold. The TFEX has benefitted from investor interest in safe havens, up 15% over last year’s 199,749 contracts per day.

US payroll data last week led to a boost in gold futures, which rose 2%.

The SPDR Gold ETF is also hoarding gold, which has led to a boost in futures prices, according to MTS Gold president Kritcharat Hirunyasiri.

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