IME to Resume Gold Futures Contracts

EghtesadOnline: The CEO of Iran Mercantile Exchange says the gold coin futures market will resume in the near future after a short hiatus.

News ID: ۷۴۷۲۷۸

08 May 2019

Hamed Soltaninejad said new gold coin futures have improved to be compatible with the market rules and protect the interest of investors, IRIB news reported.

After unprecedented volatility in the spot gold market last summer, following steep increases in currency rates, the IME suspended all trade in gold coin futures.

Gold futures are standardized, exchange-traded contracts in which the buyer agrees to take delivery, from the seller, a specific quantity of gold at a predetermined price on a future delivery date, Financial Tribune reported.

The contracts are standardized by a futures exchange as to quantity, quality, time and place of delivery.

Soltaninejad said there are four active commodity funds in the IME that mainly operate in the gold market. The aggregate value of these is 40 trillion rials ($266.6million).

On the merits of gold funds, he said it minimizes risks of counterfeit gold as seen in the spot gold market. In addition, trading costs in these funds are lower compared to other markets.

Moreover, as trade in the capital market occurs in a transparent environment, gold funds help in regulating commodity prices in the spot market.

Commodity funds is a type of financial instrument made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets.

They seek to track the underlying price of various commodities and natural resources. This can include assets such as corn, copper, oil, wheat and gold.

Soltaninejad added that commodity funds provide a systematic market for investors who seek to turn their purchased commodities and securities into standard assets in the capital market.

Founded in 2006, IME trades in agricultural, industrial and petrochemicals in the spot and futures markets. The commodity bourse started trading in gold futures in 2008. IME added gold certificates of deposit to its arsenal in Feb 2017 to complement its gold coin futures trading.