Precious Metal Derivatives - Uganda

The nominal value in the Precious Metal Derivatives market is projected to reach US$4.52bn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 5.55% resulting in a projected total amount of US$5.92bn by 2029.
The average price per contract in the Precious Metal Derivatives market amounts to US$0.03 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 192.60k 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 Uganda has been experiencing a notable increase in activity and interest recently.

Customer preferences: Investors in Uganda 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 offer exposure to the price movements of precious metals without the need for physical ownership.

Trends in the market: One of the key trends in the Precious Metal Derivatives market in Uganda is the growing demand for gold derivatives. Gold has always been a popular choice for investors seeking a safe haven asset, especially during times of economic uncertainty. As global geopolitical tensions and inflation concerns persist, the interest in gold derivatives as a store of value remains strong among Ugandan investors.

Local special circumstances: Uganda's strategic location in East Africa and its stable economic growth have positioned the country as an attractive destination for foreign investment. This, coupled with a relatively well-regulated financial market, has created a conducive environment for the development of the Precious Metal Derivatives market. Additionally, the increasing awareness and education about financial instruments in Uganda have contributed to the rising popularity of Precious Metal Derivatives among retail and institutional investors.

Underlying macroeconomic factors: The macroeconomic landscape in Uganda, characterized by steady economic growth and low inflation rates, has bolstered investor confidence in the financial markets. As the country continues to attract foreign direct investment and improve its infrastructure, the outlook for the Precious Metal Derivatives market remains positive. Moreover, the government's efforts to enhance regulatory frameworks and promote financial inclusion have further supported the growth of the derivatives market in Uganda.

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.