The Tokyo Commodities Exchange (TOCOM) is joining with the Shanghai Gold Exchange (SGE) to become the second major physical gold market in Asia. Beginning on July 25, the TOCOM will begin deliveries for spot contracts, and is the only gold exchange accepted for futures contracts in Japan.
Since Japanese bonds fell into negative yields, investors and consumers have been buying physical gold at incredible rates. And now that their market will have an official gold exchange like the one that opened in Shanghai last year, the precious metal will become even more liquid and draw more customers into gold.
The Tokyo Commodity Exchange Inc. (TOCOM) has announced today that July 25th will be the start date of new Gold Physical Transaction, pending regulatory approval. Gold is the most actively traded commodity at the Exchange with both futures and options contracts listed.
Simultaneously, TOCOM will introduce a delivery at settlement option for the Gold Rolling Spot contract. Originally a cash-settled contract, the change is expected to better serve investor needs.
Financial markets fell in reaction to the Brexit vote and the world economy is turning increasingly uncertain. Hence, Gold is in greater demand as a safe asset that removes credit risk. It is also seen as an effective inflation hedge and superior for long-term asset protection. Additionally, gold provides portfolio diversification, since price movement tends to uncorrelated with equity and bond prices.
With the launch of this Gold Physical, TOCOM is providing a single platform where investors can conduct spot trading or hedge in gold with transparent pricing. TOCOM is the only regulated exchange that operates a gold market in Japan, and continues to improve investor convenience. - Leaprate