Gold futures trading to be launched in september

ALL THAT glitters is gold. A solid-gold Mickey Mouse is shown in Tokyo. The Thailand Futures Exchange will start trading gold futures in September.

The 96.5-per-cent bullion is the most popular gold bar traded in the Thai market. It will be the exchange's third product, following SET50Index Futures and SET50Index Options.

TFEX managing director Kesara Manchusree said yesterday that gold trading would be subject only to cash settlement. TFEX will propose all details of the trading operation to the Securities and Exchange Commission (SEC) for approval.

"TFEX believes everything will be ready by September," Kesara said.

In the initial stage, gold trading in TFEX will need market-makers. Therefore, experienced overseas experts will be allowed to fulfil this role in the Thai derivatives market. Consequently, this will allow local gold traders in Thailand with overseas trading experience to participate.

Traders interested in TFEX gold trading can attend a series of seminars to educate investors. Today, the exchange - together with researchers from Thammasat University, the SEC, brokers and local gold traders - will hold a seminar on the subject.

Kesara added that TFEX had already approved nine qualified brokers for derivatives trading.

TFEX, the financial-product derivatives market, started trading two years ago, a few years after establishment of the country's first commodity derivatives market - the Agricultural Futures Exchange of Thailand.

Meanwhile, gold declined in London as the dollar strengthened and crude oil prices fell, diminishing the metal's appeal as an alternative asset and hedge against inflation.

Gold has gained 4.2 per cent this year, as the dollar fell 5.4 per cent against the euro. The greenback strengthened on speculation that a rebound in US retail sales will support the Federal Reserve's case for raising interest rates. The gain also prompted the drop in crude oil prices.

The gold market is "definitely looking at the crude oil and the euro-dollar exchange rate," Alexander Zumpfe, a precious-metals trader at Germany-based Heraeus Metallhandels, said by telephone. "There's much talk about inflation at the moment, which means higher interest rates."

Gold for immediate delivery fell $11, or 1.3 per cent, to $869.35 (Bt28,818) an ounce as of 8:31am in London yesterday. Futures for August delivery declined $11.20 to $871.70 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Gold will probably trade at $860 to $890 in the next several days, Zumpfe said.