Precious Metal Derivatives - Worldwide

The nominal value in the Precious Metal Derivatives market is projected to reach US$18.51tn in 2024.
It is expected to show an annual growth rate (CAGR 2024-2029) of 1.93% resulting in a projected total amount of US$20.36tn 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 491.80m 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 is a dynamic and evolving sector that attracts investors worldwide due to its potential for high returns and portfolio diversification.

Customer preferences: Investors in the Precious Metal Derivatives market worldwide are increasingly drawn to these financial instruments as a hedge against inflation and geopolitical uncertainties. The ability to trade without needing to physically own the underlying assets is a key factor driving customer preferences in this market.

Trends in the market: In the United States, the Precious Metal Derivatives market is experiencing a surge in popularity among retail investors, driven by the ease of access through online trading platforms and the allure of quick profits. In Europe, there is a growing trend towards sustainable investing, leading to an increased demand for Precious Metal Derivatives that adhere to environmental, social, and governance (ESG) criteria. Meanwhile, in Asia, the market is witnessing a rise in algorithmic trading strategies and the adoption of advanced technology for trading Precious Metal Derivatives.

Local special circumstances: In the Middle East, the Precious Metal Derivatives market is influenced by cultural factors that place a high value on gold and other precious metals. This cultural affinity for precious metals drives trading activity in the region and contributes to the growth of the market. In Africa, the market for Precious Metal Derivatives is still developing, with regulatory frameworks and infrastructure being key factors that shape the local landscape.

Underlying macroeconomic factors: Globally, factors such as interest rates, inflation, and currency fluctuations play a significant role in shaping the Precious Metal Derivatives market. Economic uncertainties and geopolitical tensions can lead to increased demand for safe-haven assets like gold, impacting the prices of Precious Metal Derivatives. Additionally, government policies and central bank actions can influence investor sentiment and drive trading activity in the market.

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.