Q1: Please comment on the performance of the Gold Futures (FGLD) since its debut on Bursa Malaysia Derivatives in October, 2013. Who are the key participants in the market? How’s the response from the market participants so far, especially the retail investor?
Since FGLD started trading in Oct 2013, participation has been encouraging with growing interest. In over 10 months up to end of July 2014, 103,977 contracts were traded with an estimated total value of RM1.4 billion. On July 31, 2014, the Open Interest was 3,452 contracts with an estimated value of RM47 million. A total of 673 unique trading accounts traded FGLD with 90% of these accounts from Domestic Retail participants.
Q2:Please share your views on the outlook of the gold market and gold futures trading in 2014. Is it the right time to launch gold futures in current circumstances? What are the objectives and targets to achieve? What are the strategies or initiatives taken by Bursa Malaysia Derivatives to promote and educate the gold futures trading, especially among the retail investor?
We are glad to have launched our FGLD in Oct last year. Otherwise we would not have achieved the results I have listed down above. Can it be better? Sure it can. Gold has been widely recognized and accepted as a very good hedge against high inflation and in the uncertain times of political crisis or wars. Now that we
have launched FGLD traded in Ringgit, we have brought Gold trading very close to the Malaysian domestic market participants. All can now trade on Gold without foreign currency risk exposures.
The outlook for gold remains uncertain. At our first Gold & Precious Metals Price Outlook Symposium held on June 28, 2014, many of the expert industry speakers opined that Gold is currently trading a sideway market with a price range of between US$1,250 to 1,350 per Oz in the short term and between US$1,200 to 1,550 in the longer term.
Gold is a familiar investment asset and is generally well received, more so in times of uncertainty. Recently, with the political crisis & civil wars in Ukraine and in the Middle East, a lot of market uncertainty has again built up and Gold prices have reacted upwards with lots of concerns over how the unrest and crisis will eventually play out.
On elevating market knowledge, all our futures brokers are well prepared to educate and train their clients on how to trade Gold with the FGLD futures contract. I want to encourage all retail investors to make full use of their relationships with their futures brokers to learn as much as they can on Gold futures trading. The investment experts have widely encouraged on the holding of some gold investments within an investment portfolio as an insurance hedge against the potential risk of runaway inflation. It is well advised to retail investors to establish a ready setup for the investing and trading in Gold. Gold has become an important investment subject which all serious investors must know and be equipped with.