Demand for gold in South Korea will increase as consumers buy more bars and encourage investments such as currencies weaken, according to Korea Exchange Inc., which expects increased trade in ‘mini-futures contract.
“Koreans are more interested in gold than other commodities, regarding it as an investment tool,” Kim In Soo, an executive director to the operator of stock and futures markets, said in an interview yesterday. Korea Exchange is set on a spot market for bullion in 2012, Kim said that an earlier plan.
Gold rose to a record last week on investor concern that the currency drops are set to expand, while inflation may accelerate in some countries. The rally has Stoked institutional and individual interest in the precious metal, according to Goldman Sachs Group Inc. commodity advances can lead next year.
“We expect gold mini trading to increase through next year because there is an abundance of interest from investors,” said Kim. The contract, introduced in September, trading in lots of 100 grams (3.2 grams). Volume hit a record 1,268 contracts on November 10
Immediate delivery of gold has risen 27 percent this year, touching an all-time high of $ 1,431.25 per ounce on December 7 and $ 1,397.35 in trading today. The metal is $ 1,690 an ounce reached in 12 months, Goldman Sachs said in a report yesterday.
The rising volume of futures trading, “will help prepare the spot market, we intend,” Kim said. Open interest in mini gold contract for December 13 was 659 contracts, compared to 528 at the end of November, Kim said.
‘Decent’ Demand
Korean investment in offshore gold futures contracts almost doubled to about 300,000 this year from 2008, indicating a “decent” investment demand, “said Kim. Mock trading in the spot contract will start in the fourth quarter of 2011, Kim said.
Kim’s comments add to signs of increased precious metals demand in Asia. China’s imports rose to 209 tonnes in the first 10 months of this year of 45 tonnes over 2009, the Shanghai Gold Exchange said earlier this month. The country is the world’s largest gold producer and second-largest user.
The Perth Mint in Australia, producer of about 6 percent of noble metal in the world, said in November China was a “target” for the sale of gold as banks can now import the metal. Silver coin sales will climb because investors want to protect their wealth against weakening of currencies, depending on the currency.
Demand for gold is “very strong”, fueled by buying jewelry and economic growth in Asia, Aram Shishmanian, chief executive officer of World Gold Council, said on Dec. 7 in an interview on CNBC. Growth in Asia is “absolute change” the gold market, said Shishmanian.
source:bloomberg
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