Gold Futures: Asia Overtakes the US

Asian trading in "paper gold" futures just overtook the New York Comex market...

IN THESE TIMES of economic meltdown, reports Commodity Online from Mumbai, it is good news for Asia and bad tidings for the United States as far as the Gold Futures business is concerned.

Asia has overtaken the United States in futures trading in gold contracts, one of the hottest traded commodities in the world.

According to a report from Futures Industry magazine, gold futures trading in Asia now has two active hubs: Mumbai in India and Shanghai in China. There has been a great leap in the trading of Gold Bullion futures in these two cities, and America is losing out to Asian nations in gold derivatives.

Analyzing the trading data for the first eight months of 2008, the report says that gold futures trading in commodity exchanges in Mumbai, Shanghai, Tokyo and Taiwan reached a record 49.8 million contracts, far ahead of the 34.3 million contracts traded in the United States exchanges.

"Seven of the 10 top gold contracts in the world now are Asian," says the report, pointing out that much of the growth in gold futures was from Mumbai and Shanghai. While volumes on Shanghai Gold Exchange in China were 17,831,455 contracts, on the Multi Commodity Exchange (MCX) in India it was 13,709,106 contracts. On Tokyo's Tocom commodity exchange, some 10,840,658 contracts were traded.

The magazine notes that the gold boom in Asian countries is driven by the search for a save haven as the value of stock-market investments continues to evaporate. "Asian investors [already] have a greater cultural predisposition towards gold than westerners," says Futures Industry.

Highlighting the success story of gold futures trading in Asian commodity exchanges, the report says the Tokyo Commodity Exchange is making wonderful progress in promoting mini-sized contracts by throwing open its door to global players. On the Indian commodity exchanges, the MCX – the largest Indian commodity bourse – can also tap the enormous Gold Investment demand in the domestic economy.

"MCX's gold and gold mini-contract each have more than doubled in size over the last year, while interest in the gold contracts offered by its local rival NCDEX has been sliding downwards," it adds.