Precious Metal Derivatives - Asia

The nominal value in the Precious Metal Derivatives market is projected to reach US$3.13tn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 2.05% resulting in a projected total amount of US$3.47tn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.02 in 2024.
From a global comparison perspective it is shown that the highest nominal value is reached United States (US$11.92tn in 2024).
In the Precious Metal Derivatives market, the number of contracts is expected to amount to 191.10m by 2029.

Definition:

The Precious Metal Derivatives market refers to derivatives of precious metals such as gold or silver. These include financial vehicles such as options and futures. Derivatives allow investors to profit from a commodity’s value development without owning the physical commodity (e.g. instead of owning a unit of gold, an investor could own a derivative of gold). Therefore, physical commodities are out of scope in this analysis.

Structure:

The market contains the following KPIs: annual notional value, the number of traded contracts, the open interest (number of outstanding contracts at the end of a year), the average notional value per contract as well as the price data of popular specific derivatives of this category.

Additional information:

Examples of popular precious metal derivatives are gold, silver, or platinum.

Precious Metal Derivatives, e.g. Gold, Silver, Platinum

Physical precious metal commodities

The Precious Metal Derivatives market in Asia continues to show promising growth and development. Customer preferences in the Asian market for Precious Metal Derivatives are largely influenced by a desire for portfolio diversification and hedging against economic uncertainties.

Investors in this region are increasingly turning to derivatives as a way to manage risk and potentially enhance returns in their investment portfolios. Trends in the market vary across different countries in Asia. For example, in China, the demand for Precious Metal Derivatives is driven by the country's strong manufacturing sector and the need for hedging against commodity price fluctuations.

In India, on the other hand, cultural affinity towards gold as a store of value fuels the demand for gold derivatives. Local special circumstances, such as regulatory frameworks and market infrastructure, play a significant role in shaping the Precious Metal Derivatives market in Asia. Countries with well-established financial markets and clear regulatory guidelines tend to attract more investors looking to trade in derivatives.

Underlying macroeconomic factors, including interest rates, inflation, and geopolitical events, also impact the Precious Metal Derivatives market in Asia. For instance, changes in interest rates by central banks can influence the demand for derivatives as investors adjust their risk exposure based on the cost of capital. Geopolitical tensions can drive up demand for safe-haven assets like gold, leading to increased trading activity in gold derivatives.

Data coverage:

Figures are based on commodity derivatives, their notional value, the number of contracts traded, the open interest (outstanding contracts at the end of a year), and the average value of a contract.

Modeling approach / Market size:

Market sizes are determined by a Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use market research & analysis, and data of World Bank, as well as the World Federation of Exchanges. Furthermore, we use relevant key market indicators and data from country-specific associations and national data bureaus such as GDP, wealth per capita, and the online banking penetration rate. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are GDP per capita an the online banking penetration rate.

Additional Notes:

The market is updated twice per year in case market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Precious metals have long been seen as a hedge against inflation and economic uncertainty. When stock markets are volatile or currencies devalue, investors flock to precious metals like gold and silver as a store of value, driving their prices up. Gold, in particular, stands out as the most popular choice for protecting wealth in times of uncertainty, with central banks around the world holding vast reserves to safeguard against currency fluctuations and political upheaval. Also, the demand for gold as an investment outweighs its demand for industrial uses - more so if we also consider owning jewelry as a form of investment. This pattern contrasts sharply to other precious metals. Silver, for instance, has a much stronger industrial demand, due to its use in sectors like electronics, solar panels, and medical equipment. Platinum follows a similar pattern, with industrial demand outpacing investment demand, due to the its many different end uses.