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Gold Markets in Asia to See Increased Price Action

Thailand’s Gold Traders Association (GTA) wants to “take back” approximately 30% of lost trading volume from Singapore’s new spot gold exchange, and in return hand them more competition in the region by creating Thailand’s first-ever spot gold market.

GTA and its seven-member board of gold dealers held a meeting with The Stock Exchange of Thailand (SET) in late July and agreed to back the plan. The support for the idea didn’t come easy, as it took SET five years to persuade the group. Some dealers were under the false impression that the new Singapore exchange would help them, not hurt them.

Foreign brokers in Thailand with networks in Singapore were able to use the new exchange to their advantage by offering more efficient pricing, but local dealers without similar networks were hurt and watched their trading volume take a 30% hit.

Kritcharat Hirunyasir, the president of MTS Gold (one of GTA’s members), said that gold trading volume in Thailand totals approximately 2 trillion baht per year (US$62.5 billion), adding that local investors would have more confidence in the market if it were run by the SET.

Mr. Hirunyasir also believes that the new market should be quoted in U.S. dollars to increase competitiveness and mitigate any currency risk.

Although the GTA and market regulators have agreed in principle, the market could take more than six months to start operations. This is obviously a “sensitive topic” for many dealers, and so careful consideration is still very much needed.

The group visited the Hong Kong bullion exchange recently, and is planning to visit Shanghai’s non-profit gold exchange next month. The visits are said to be learning experiences.

H/T: Bangkok Post