Three Years Of Record Growth Proves Gold Remains Relevant - CME
BOSTON -(Kitco News)- While gold investors havelamented the lackluster price action as a sign that nobody cares about theyellow metal, the world’s most liquid gold marketssaid that perception is the farthest thing from the truth.
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| Young-Jin Chang, global head of metals at CME Group |
In an interview with Kitco Newson the sidelines of the 2018 London Bullion Market Association annual PreciousMetals conference, Young-Jin Chang, global head of metals at CME Group, saidthat the exchange is expecting to see its third year of record growth in metalstrading.
It its recent third-quarter earningsreport, CME Group reported an 18% increase in trading volume in gold futures.
“In the last three years, metalstrading has been one of the fastest-growing sectors in the CME,” she said.
While most speculators have beensignificantly bearish on the yellow metal, holding record short positions inCME futures contracts, Chang said that they are starting to see growinginterest from investors who are looking for more defensive assets.
“There is a lot of uncertaintyand a growing lack of confidence in the global economy, and because of that, wethink more people are turning to gold,” she said. “Gold’s relevance in themarket has not diminished. We have seen tremendous growth in the last threeyears.”
Although North American investorinterest plays an important role in the gold market, Chang said that theexchange has actually seen superior growth from Asia and Europe. She added thatthe growth from non-U.S. investors demonstrates the yellow metal’s globalappeal.
“The growth we are seeing isanother indication that the world is becoming more connected and informationflow is very fast,” she said. “Regardless of where you are in the world, in aworld with increasing economic risk, you have access to a deep liquid goldmarket.”
Another growth trend the CME isseeing, Chang said, is in less expensive and lower-risk derivatives. Sheexplained that the exchange has seen triple-digit growth in its weekly options.Chang added that in August alone, when gold fell to a 1.5-year low, theexchange had a 29% increase in options volume.
“A lot of the demand for our weekly option iscoming from the retail market,” she said. “It allows investors to have exposureto gold without taking on a huge amount of risk.”
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.  |