Precious Metal Derivatives - Saudi Arabia

The nominal value in the Precious Metal Derivatives market is projected to reach US$3.13bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 5.68% resulting in a projected total amount of US$4.12bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.00 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 1.41m 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 Saudi Arabia is experiencing a notable surge in activity and interest.

Customer preferences: Investors in Saudi Arabia are showing a growing interest in diversifying their portfolios and hedging against market uncertainties through Precious Metal Derivatives. The allure of potentially high returns and a way to mitigate risks is attracting both institutional and retail investors.

Trends in the market: One of the prominent trends in the Saudi Arabian Precious Metal Derivatives market is the increasing adoption of innovative trading strategies and products. Investors are exploring new ways to leverage derivatives to maximize their gains and protect their investments. Additionally, there is a noticeable uptick in the trading volume of these instruments, indicating a heightened level of market participation.

Local special circumstances: Saudi Arabia's position as a key player in the global oil market and its efforts to diversify its economy are influencing the Precious Metal Derivatives market. As the country looks to reduce its dependence on oil revenues, investors are turning to alternative investment avenues like precious metals. This shift in focus is driving the demand for Precious Metal Derivatives in the country.

Underlying macroeconomic factors: The geopolitical stability and economic reforms in Saudi Arabia are creating a favorable environment for investment in Precious Metal Derivatives. As the country continues to implement structural changes to attract foreign investments and boost economic growth, the derivatives market is poised to benefit from increased liquidity and investor confidence. Additionally, the correlation between geopolitical events and precious metal prices is shaping investor sentiment and driving the demand for derivatives as a risk management tool.

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.