CME Group Launches Physical Gold Kilo Futures in Asia

The ever-growing appetite by Asian investors to park money into physical gold has prompted a gold kilobar listing on COMEX

If there is any place in the world where the yellow metal hasn’t lost its luster for the past three years since prices of gold peaked around $1,900 per ounce, it’s Asia. The CME Group has become the latest exchange to start providing gold futures with physical delivery in the region.

The company announced that starting from January 26th, it will offer physical Gold Kilo Futures contracts. The move comes as the year kicks off with a blast for gold bulls in a month which is typically very bullish for gold.

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According to historical data, gold prices have grown on average about 1.6% in January, between 1975 and 2013. This year doesn’t seem to be any different as gold prices have already rallied 2% in the first three days of trading in 2015.

Gold Chart 2015
Hourly Gold Prices Chart in 2015, Source: NetStation

The new Physical Gold Kilo contract will be listed on COMEX and will be directly tied to the prices of 9999 gold in Hong Kong.

CME Group’s Executive Director for precious metals, Harriet Hunnable, said, “This new Gold Kilo Futures contract will complement the familiar benchmark 100 troy ounce Gold Futures, and will provide a precise risk management instrument for the Hong Kong physical gold market and exposure to regional gold price formation.”

“As demand for gold grows rapidly in China and the Far East markets, and physical bullion moves eastward, the world increasingly looks at market conditions and price signals in the biggest bullion trading hub in the region – Hong Kong,” she explained.

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With the average household in China holding as much as 20% of its assets in gold and with the savings culture dominating the region, easy money prompts individuals and investors to seek alternatives which have a good history of storing value.

Gold has rallied close to 400% for the past 15 years and is a proven store of value especially in times of economic turmoil. With Chinese growth rampant over the past decade, the cultural appeal of physical gold investment has only been on the rise as purchasing power of the population increased.

The physical delivery of the product will take place at several approved vaults in the region’s key hub for gold trading, Hong Kong. Physical gold will be electronically transacted via CME Globex, under the ticker GCK.

Last October, the Singapore Exchange started offering a new Singapore Kilobar Gold contract which is for 25 kilograms of 99.99% pure gold, introducing centralized trading and clearing of a physically-delivered gold contract in Singapore.

Following are the full specifications of the CME Group’s Physical Gold Kilo Futures contract.

Gold Kilo Fact Card

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