Precious Metal Derivatives - Japan

The nominal value in the Precious Metal Derivatives market is projected to reach US$261.50bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 4.89% resulting in a projected total amount of US$332.00bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.04 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 10.73m 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 Japan is experiencing a notable shift in recent years.

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

Trends in the market: One prominent trend in the Japanese Precious Metal Derivatives market is the growing demand for gold derivatives. This trend is driven by a combination of factors, including geopolitical uncertainties, low interest rates, and inflation concerns. As investors seek safe-haven assets, gold derivatives have become an attractive option for both institutional and retail investors in Japan.

Local special circumstances: Japan's unique economic landscape, characterized by an aging population and a prolonged period of low interest rates, has contributed to the increasing popularity of Precious Metal Derivatives. With traditional investment options offering limited returns, investors in Japan are turning to alternative assets such as gold and silver derivatives to enhance their portfolio performance.

Underlying macroeconomic factors: The development of the Precious Metal Derivatives market in Japan is also influenced by broader macroeconomic factors such as currency fluctuations, trade dynamics, and government policies. As the Japanese yen remains a key safe-haven currency in the region, movements in the currency markets can impact the demand for Precious Metal Derivatives as investors look to protect their wealth in times of uncertainty. Additionally, regulatory changes and initiatives aimed at promoting the development of the derivatives market in Japan are shaping the landscape for Precious Metal Derivatives trading in the country.

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.