Thailand plans to start trading in gold futures by the end of this year, the head of the futures exchange said on Monday, but gold bullion traders are worried about their livelihood and are seeking a delay. "The trading system and legislative process are expected to be completed in September," Thailand Futures Exchange (TFEX) Managing Director Kesara Manchusree said.
"We are waiting for the approval of the Securities and Exchange Commission," she added. The futures exchange has invited brokerages and gold traders to participate in futures trade, she said. The fragile global economy, a weak US dollar and soaring oil prices pushed gold to a record high above $1,030 per ounce in March as investors turned to a traditional haven at times of uncertainty.
However, bullion has since fallen sharply and was trading around $800 on Monday. "The gold futures will be another choice for investors to make money from volatile prices amid bearish sentiment on other markets," Kesara said. However, the prospect of futures trading was not welcomed by some gold traders, who were worried that the market would be dominated by speculators rather than hedgers or traders.
"We have sent a letter to the Securities Exchange Commission asking them to delay gold futures trading. We are concerned that participants are not ready for futures trade," Gold Traders Association official Jitti Tangsitpakdi said.
He said small gold buyers could shift to the futures market due to the smaller cash requirement required there, compared to buying gold directly from a gold shop for investment. A TFEX official said players would have to put down only 10 percent of a contract value of around 120,000 baht ($3,547). "That will put more than 7,000 gold shop owners and traders out of business," Jitti said.