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Roll-out of Gold-D uncertain as TFEX lags

Traders are ready for Gold-D, but the SET and TFEX have yet to decide on its debut date.

Thailand Futures Exchange (TFEX) has yet to set a new date to roll out the Gold-D product, whose main feature is physical settlement, after being delayed since August last year.

"Gold traders have been ready to trade [the product] for a year but the Stock Exchange of Thailand (SET) and TFEX still can't launch it. We've heard that the process of Gold-D trading approval is still stuck at the policymaker level [either the Revenue Department or the Bank of Thailand]. It should not take so long as the Thai market will lose trading opportunities," said Jitti Tangsitpakdi, president of the Gold Traders Association.

Gold-D's debut was due for the middle of last year before it was pushed back again to August.

The product is a substitute for the planned spot gold exchange and is intended to entice local gold dealers to trade the precious metal at home after several of them have traded physical gold on Singapore's exchange.

Apart from physical settlement, the 99.99% pure Gold-D would offer investors the option of cash settlement, while it could be quoted in US dollars but settled in local currency.

Mr Jitti said many TFEX gold brokers have suffered losses for more than two years as gold price has been in a downward trend, while Thai investors tend to be bullish on investment.

TFEX offers gold futures with two contract sizes -- 50-baht weight and 10-baht weight.

TFEX and SET executives have not commented on the matter.

Pawan Nawawattanasub, chief executive at YLG Bullion International Co, said gold brokers are keen to trade Gold-D and expect that the spot gold-like product will help gold paper trading become more active in TFEX.

Gold trading sentiment has barely changed since the US Federal Reserve lifted its policy rate as expected last month, but the price of gold could be volatile if the next increase comes faster than expected, she said.

The gold price is set to move in a range of US$1,100-1,300 (37,983-41,436 baht) per ounce in the second quarter, said Ms Pawan, adding that if the US dollar retreats, the gold price -- which typically runs counter to the greenback -- could hit $1,300 an ounce.

The softer dollar is likely if US President Donald Trump again fails to push through legislation as the market will lose confidence that he can put his policies into action, she said.

YLG forecasts the gold price will reach $1,350-1,400 an ounce in 2017 due to uncertainty over the US economy, among other factors.

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