Singapore
continues its push to be a global gold hub. The new exchange traded Singapore
kilobar gold contract will launch in less than two weeks - on October 13. The
new contract is a 1 kilogramme physically deliverable gold contract for the
Asian and global wholesale gold market.
Launching of SGX Gold Futures Contract: (from
left) Harshika Patel, Managing Director, JP Morgan; Sunil Kashyap, Managing
Director, Bank of Nova Scotia; Aram Shishmaniam, CEO, World Gold Council; Ng
Cheng Thye, President, Singapore Bullion Market Association; Seah Moon Ming,
Chairman, International Enterprise (IE) Singapore; Muthukrishnan Ramaswami,
President, Singapore Exchange; Philip Hurley, CEO (South East Asia), Standard
Merchant Bank; Jeremy East, Managing Director (Global Head of Metal Trading),
Standard Chartered Bank.
In a joint statement, International Enterprise (IE) Singapore, Singapore
Bullion Market Association (SBMA), Singapore Exchange (SGX) and the World
Gold Council, announced the new contract yesterday.
The contract will be traded on SGX, the first wholesale 25 kilobar gold
contract to be offered globally, and this is a collaboration among the four
parties. The SGX is Singapore’s securities and derivatives exchange and
clearing and depository provider.
This caters to the very high demand for physical gold in China and
throughout Asia, which has increased significantly over the last decade.
This new gold contract differs from others in that as well as acting as a
price discovery benchmark for 1kg gold bars in the Asian region, it has been
specifically designed to actually deliver gold to large buyers, wholesalers
and institutions, presumably including central banks.
Settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold
bar is 32.15 troy ounces.
The Singapore contract will be in lots of 25 kilogrammes and denominated
in U.S. dollars. It will trade for three hours in the Singapore morning time.
Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5
hours ahead of the Indian market, but is in the same time zone as both Hong
Kong and Shanghai.
Six consecutive daily contracts will trade at the same time, so when one
contract expires, another will be added.
Physical settlement is two days after trade date and consists of 99.99
purity 1 kilogramme gold bars that meet the approval of the Singapore Bullion
Market Association (SBMA) good delivery list . This means that wholesalers
will be able to gauge demand and supply of 1 kg bars over the following
week.
Some analysts have said that the protests in Hong Kong and the uncertain
political outlook in Hong Kong may give Singapore an advantage in terms of
becoming Asia and possibly the world’s global gold hub.
Separately, the first gold-dispensing automated teller machine in Asia
have been launched in Singapore. The two ATMs are in Marina Bay Sands and
Resorts World Sentosa hotels.
Launched by Asia Gold ATM, Singapore is the fourth country to have the
facility, next to the UAE, the UK and the US. Items such as 1g to 10g pure
gold bars, as well as customised gold coins, can be bought from the
machine.
Last Wednesday, the day the machines were unveiled to the public, a one gram
pendant sold for $100 while it was $660 for a 10 gramme. The items can be
paid through credit card or cash. Gold will be sold at different prices
daily, based on the day's global prices.
The ATMs mean little or nothing with regards to Singapore becoming a
global gold hub. However, they show how gold is respected and sought after in
Singapore and the people and institutions of Singapore, have a significant cultural
affinity with gold.
Unlike in the west, where people who believe in using gold for wealth
preservation or for saving are sometimes called names and dismissively called
“gold bugs”.
Gold and money, throughout history has flowed to where it is better treated.
Today, gold continues to flow from West to East. A sign of shifting economic
fortunes.
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MARKET UPDATE
Today’s AM fix was USD 1,210.00, EUR 959.94 and GBP 746.55 per
ounce.
Yesterday’s AM fix was USD 1,217.75, EUR 960.67 and GBP 750.54 per
ounce.
Gold in Singapore was essentially flat and trading at $1,216.55 an ounce
prior to a sharp bout of selling in late morning trading in London quickly
pushed gold down nearly $10.
Gold fell $1.00 or 0.08% to $1,216.50 per ounce and silver slipped $0.14
or 0.79% to $17.49 per ounce yesterday.
Gold has declined 5.5% in September, its worst monthly performance since June
2013, when it hit a 9 month low at $1,206.85 last week.
Silver was set for a third consecutive monthly loss, and platinum is on
track for an 8% drop, its worst monthly decline since May 2012.
Palladium has been by far the worst performer in the category with a 12.4%
decline.
However, in physical markets, data from the U.S. Mint show that it has
sold over 50,000 ounces of American Eagle gold
coins so far in September, its highest monthly sales since January.
There is evidence too that demand has picked up significantly in India and
China.
The world’s largest bullion buyer, China imported more gold in September
than in the previous month due to demand from retailers stocking up for the
upcoming National Day holiday.
In the last month, withdrawals from the SGE have totalled over 170 tonnes
– this suggests an annual rate of over 2,200 tonnes. "The physical
volumes have been high this month compared to August. I would say imports
could be at least 30% higher than last month," a trader with one of the
15 importing banks in China told Reuters.
Meanwhile, demand in India - the second biggest buyer of gold - has also
picked up significantly in recent days as the festival and wedding season
began in earnest.
Speculators continue to sell paper and electronic gold while prudent
buyers, in Asia and elsewhere continue to accumulate.
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