Mini gold futures were relatively quiet on their first day of trading yesterday, as investors were reluctant to open positions due mainly to "sideways-down" gold prices in the spot market.
The new futures, with 10-baht gold weight per contract, closed the day with 1,089 contracts traded.
Gold futures with 50-baht gold weight per contract traded 3,405 contracts, out of overall trading on the Thailand Futures Exchange of 12,933 contracts.
"It wasn't good timing for the first trading day of mini gold futures, as gold prices in the spot market are unpredictable," said Pawan Nawawattanasub, president of YLG Bullion and Futures.
As a result, the trading volume was unremarkable. Many investors were in wait-and-see mode as there might be too much risk to take any position, she said.
Pawan said gold prices traded in the spot market were turning down and trying to test the strong resistance level of US$1,200 (Bt38,658) per ounce. Given the situation, there was more of chance of losing than gaining if investors opened a short position and then bullion gold prices started to swing upwards.
Gold closed at $1,181.50-$1,182.50 an ounce in Hong Kong yesterday, up from Friday's close of $1,168-$1,169.
Mini gold futures require a smaller investment per contract - about Bt20,000 - than gold futures (about Bt90,000).
Nuttapong Hirunyasiri, managing director of MTS Gold Futures, said immediate-trading gold prices were in sideways-down mode, which resulted in mini gold futures being traded yesterday at a lower-than-expected volume.
"It will take a few more weeks to finalise where mini gold futures will be, and who will get involved," he said.
Basically, mini gold futures should have more trading volume than gold futures, as the smaller amount per contract will allow many more investors to participate.
However, Pattapong estimates that around 30-40 per cent of investors who trade in gold futures will shift their investments to mini gold futures. About 10 per cent of gold futures investors are expected to invest in both types.
Jitti Tangsithpakdi, president of the Gold Traders Association, said after the opening ceremony for mini gold futures that the new product would negatively impact gold shops, as clients who used to buy baht gold might shift to contracts of mini gold futures instead.
"Now, physical gold sales at gold shops have slowed down, and this [trend] will be seen more clearly in the next four months," he said.
Meanwhile, Pawan said YLG Bullion and Futures' client base was divided into two groups: physical gold investors and gold futures investors. "Not more than 5 per cent of physical gold investors also trade gold futures and [engage in] hedging," she said.
Nuttapong said 30-40 per cent of MTS's physical gold investors had shifted to gold futures.
Seen in photo: Exchange authorities' representatives ring the bell to start the mini gold futures trading yesterday. Seen in the photo, from left, are Securities and Exchange Commission Secretary-General Thirachai Phuvanartnaranubala, Deputy Finance Minister Pradit Pataraprasit and Stock Exchange of Thailand President Charamporn Jotikasthira.