"Center of Gravity" for Gold Trading Moves Towards Asia, Says World Gold Council

The World Gold Council has indicated that Singapore is poised to become a leading hub in the gold market as the "center of gravity" for gold trading moves towards Asia.

"The center of gravity of the gold market has shifted east, with Singapore, fortuitously placed as the potential fulcrum of this new balance," said Shaokai Fan, head of Asia-Pacific and global head of the World Gold Council.

This shift is attributed to several factors, as below:

Rising Gold Consumption: There's an increase in gold consumption among major emerging market economies, most of which are located in Asia. Among central banks, the People’s Bank of China was the largest buyer of gold in 2023.

Proximity to Central Banks: Singapore's strategic location near central banks that are actively increasing their gold reserves plays a significant role. 

Gold Mining Supply Centers: About 25% of the world's gold mining supply is in close proximity to Singapore, including countries like China, Australia, Indonesia, and others.

Political Stability and Tax Policies: Singapore's political stability and the removal of sales tax on investment gold further strengthen its position as a gold trading hub. The removal of GST on investment gold in Singapore, the establishment of good delivery refineries here have bolstered Singapore as a leading hub for gold trading.

Since October 2012, Singapore’s government exempted the Goods and Services Tax (GST), also known as a sales tax, from investment grade precious metals.

Shaokai Fan, the World Gold Council’s Head of Asia-Pacific and Global Head of Central Banks, mentioned that these elements, along with Singapore's potential as an alternative to London and New York for central bank gold vaulting, are setting the stage for Singapore to lead the gold market in the future.

Key drivers of gold demand

The key drivers of gold demand are influenced by a variety of factors, which can be broadly categorized into four main areas:

1. Economic Expansion: Periods of growth are very supportive of gold demand in sectors like jewelry, technology, and long-term savings.

2. Risk and Uncertainty: Market downturns often boost investment demand for gold as it is considered a safe haven during times of financial instability.

3. Opportunity Cost: The interest rates and relative currency strength can influence investor attitudes towards gold. Lower interest rates tend to decrease the opportunity cost of holding non-yielding assets like gold.

4. Momentum: Capital flows, positioning, and price trends can ignite or dampen gold's performance. Investor behavior and market trends can significantly affect demand.

Additionally, demand for gold comes from several sources, including jewelry fabrication, investment (bars, coins, ETFs), central bank purchases, and technology/industrial uses. Jewelry consistently accounts for a significant portion of annual gold demand³. Inflation concerns and central bank policies also play a crucial role in driving gold demand.

Varying Gold demand across different regions

Gold demand varies significantly across different regions due to cultural, economic, and market factors.

In Asia, countries like China and India are the largest consumers of gold, primarily due to cultural affinity towards gold in jewelry and as an investment. Festivals and weddings often drive significant demand in these regions.

Gold is also an important part of culture in the Middle East, with demand driven by jewelry consumption and investment purposes.

European demand for gold is largely investment-driven, with products like gold-backed ETFs being popular. Central bank purchases also contribute to the demand in this region.

In North America, investment demand, including bars, coins, and ETFs, dominates the gold market. The region also sees significant industrial demand due to technological applications. In Central and South America, the demand in these regions is primarily driven by jewelry and investment, with Brazil and Argentina being notable markets for gold consumption.

African gold demand is mostly for jewelry and investment, but the region is also a significant producer of gold, which affects the local market dynamics.

It's important to note that these trends can shift due to various factors such as economic policies, market conditions, and geopolitical events. The World Gold Council provides comprehensive data on gold demand by sector and country, which is updated quarterly.

NSE Launches 13 New Commodity Derivatives Contracts on October 16, 2023

National Stock Exchange (NSE) is pleased to announce the launch of 13 new commodity derivatives contracts on October 16, 2023. With this launch, NSE offers 28 products in the Commodity Derivatives Segment.

The 13 new derivatives contracts include:

• ‘Option on Futures’ on Gold 1kg Futures, Gold Mini Futures, Silver Mini Futures, Copper Futures and Zinc Futures
• Gold Guinea (8 grams) Futures, Aluminium Futures, Aluminium Mini Futures, Lead Futures, Lead Mini Futures, Nickel Futures, Zinc Futures and Zinc Mini Futures

Over the last few days, the Exchange has launched 6 new derivatives contracts:

1. WTI Crude Oil – Mini Futures and Options on Futures contract
2. Natural Gas – Mini Futures and Options on Futures contract
3. Silver – Mini Futures and Micro futures contracts

The Exchange already had commodity contracts on Gold 1kg Futures, Gold Mini Futures, Gold Petal Futures (1 gram), Silver 30 Kg futures, Silver 30 Kg Option on Goods, WTI Crude Oil Futures, Natural Gas Futures, Brent Crude Oil Futures and Copper Futures.

The Exchange has seen increased interest from participants in its Commodity Derivatives Segment, with the launch of new products, particularly the derivatives on WTI Crude Oil and Natural Gas. Participation is observed from diverse categories of participants including Foreign Portfolio Investors (FPIs) and Domestic Mutual funds.

The Exchange has set up dedicated teams to provide ease of onboarding for new trading members, segmental enablement for existing trading members and other operational process such as algorithmic trading approvals for providing ease and seamless experience.

Shri Sriram Krishnan, Chief Business Development Officer, NSE said: “We are pleased to announce expansion of our product offerings in the Commodity Derivatives Segment. With the launch of 13 new products today, futures and options on all key products in Energy, Bullion and Base Metals category are available on NSE platform. This will enable participants to efficiently manage their risk across commodities on the exchange platform.”

National Stock Exchange of India (NSE) is the world’s largest derivatives exchange by trading volume (contracts) as per the statistics maintained by Futures Industry Association (FIA) for calendar year 2022. NSE is ranked 3rd in the world in the cash equities by number of trades as per the statistics maintained by the World Federation of Exchanges (WFE) for calendar year 2022. NSE was the first exchange in India to implement electronic or screen-based trading. It began operations in 1994 and is ranked as the largest stock exchange in India in terms of total and average daily turnover for equity shares every year since 1995, based on SEBI data. NSE has a fully integrated business model comprising exchange listings, trading services, clearing and settlement services, indices, market data feeds, technology solutions and financial education offerings. NSE also oversees compliance by trading, clearing members and listed companies with the rules and regulations of SEBI and the exchange. NSE is a pioneer in technology and ensures the reliability and performance of its systems through a culture of innovation and investment in technology.

For more information, please visit: www.nseindia.com

The Rollercoaster Ride of Gold Prices in India

Gold and its ever-fluctuating prices - they've spun quite a tale in India over the years. If you’re wondering just how these prices have somersaulted, strap in! We're delving into a detailed trip from 2013 until 2023.

The Golden Ride down Memory Lane

Harking back to 2013, our shiny friend was priced around Rs 29,000 per 10 grams. What a bargain, right? Then comes 2014, the price fell to Rs 28,000 and then further down to Rs 26,000 in 2015. That tumbled-down scenario didn’t last long because, believe it or not, it crawled back to Rs 28,000 in 2016.

2017 and 2018 rolled in and – kerfuffle! They brought some increase with them. Gold went up to Rs 29,000 and further to Rs 31,000 respectively. Long story short, it was a promising uphill journey. Surprising?, 

The True Gold Rush

From 2019, the gold rush really kicked in. This was great news for those who have been working on their collectible gold coin set. The price of the shiny gem leapt to Rs 35,000 per 10 grams. Then came 2020 with its many challenges, but that didn't stop gold from surging to a whopping Rs 48,000.

The following year carried a little stillness. Gold prices remained stable at Rs 48,000 in 2021, playing it cool. You know! But then again, 2022 had a different agenda and saw a climb to Rs 52,000. Gold threw us for a loop in 2023, hurtling to a record-breaking Rs 61,000 per 10 grams.

The Gold Vibes Today

When you swing to recent times, the gold prices have been nothing short of a wild rollercoaster ride. According to HDFC Securities, gold prices took a nosedive by Rs 430 to Rs 60,550 per 10 grams quite recently. On the other hand, the precious goodie settled at Rs 60,980 in the previous trade.

The Akshay Tritiya Effect

Not many would think, but Akshay Tritiya, a festival considered lucky for buying gold in India, can get the prices soaring. Like, really soaring! Why? Well, because demand skyrockets and when demand pushes, prices shove back. It's basic economics, my dudes.

Some expert insights suggest retail demand may spike around the holiday. Increased demand during this time traditionally leads to an increase in gold prices. So, if you're really thinking about it, the price hikes during this period shouldn't be too surprising.

A Glimpse into the Future

Some may say that gold prices may rise during the coming Akshaya Tritiya, especially with returns standing at 20% since last year's festival. Prices could go higher according to Anuj Gupta from IIFL Securities. One wonders...

In conclusion - or should I say, the final scoop - the thrill of gold prices leaves us all hanging. It’s an unpredictable ride, full of climbs and drops, but that's the beauty of it. You never really know where the price might venture next