Precious Metal Derivatives - GCC | Statista Market Forecast

The nominal value in the Precious Metal Derivatives market is projected to reach US$29.20bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 5.64% resulting in a projected total amount of US$38.41bn 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 1.49m 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 GCC is experiencing a notable shift in dynamics, driven by evolving customer preferences, market trends, and local special circumstances.

Customer preferences: Investors in the GCC region are increasingly turning to Precious Metal Derivatives as a way to diversify their portfolios and hedge against market volatility. The appeal of these derivatives lies in their ability to offer exposure to the price movements of precious metals without the need for physical ownership.

Trends in the market: One of the key trends shaping the Precious Metal Derivatives market in the GCC is the growing popularity of gold and silver contracts. As safe-haven assets, gold and silver derivatives are attracting significant interest from investors looking to protect their wealth in uncertain times. Additionally, the introduction of innovative derivative products, such as options and futures, is providing market participants with more flexibility and trading opportunities.

Local special circumstances: The GCC region's unique position as a hub for global trade and finance is influencing the development of the Precious Metal Derivatives market. With a strong emphasis on wealth preservation and Islamic finance principles, market participants in the GCC are increasingly seeking Shari'ah-compliant derivative products. This has led to the emergence of specialized derivatives that adhere to Islamic finance guidelines, catering to the specific needs of the local investor base.

Underlying macroeconomic factors: The performance of the Precious Metal Derivatives market in the GCC is closely tied to global macroeconomic factors, such as interest rates, inflation, and geopolitical events. Fluctuations in these key drivers can impact the demand for precious metal derivatives as investors adjust their risk exposure and investment strategies accordingly. Additionally, regulatory developments and government policies play a significant role in shaping the operating environment for derivative markets in the GCC, influencing market liquidity and participant behavior.

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.