The debut of spot gold trading on the Thailand Futures Exchange (TFEX) will be pushed back another few months from June as trading contract specifications and the physical delivery process have not been finished.
The major concern for spot gold trading was addressed after the Bank of Thailand agreed to allow the activity on the TFEX in US dollars, said MTS Gold president Kritcharat Hirunyasiri.
The smallest contract value of physically delivered gold trade on the TFEX is set at one kilogramme of gold weight, well below the Singapore Exchange's (SGX) minimum contract size of 25kg, he said.
"Gold is a global product so we should design it for global trading, offering trades in US dollars and allowing trades in small lot sizes to allow foreign and local investors to easily access the platform. We expect spot gold trading on the TFEX to be the most active in the region," said Mr Kritcharat.
Physical gold contract trading is seen as vital for the Stock Exchange of Thailand, of which the TFEX is a subsidiary, to hit its target of becoming the leading exchange in Southeast Asia. The move should boost trading volume for local gold dealers as the SGX has begun trading gold contracts.
Jitti Tangsitpakdi, president of the Gold Traders Association, said the roll out of spot gold trading remains on track, but the details of gold quality inspection and delivery were unclear.
As all investors will be allowed to trade in spot gold on the TFEX, an international intermediary organisation should be set up to approve quality before delivery, he said.
"Gold has yielded a return of over 10% this year, the highest among investment instruments, but its high volatility is expected to continue because of major central banks' monetary policies. When gold prices rise, investors should sell and lock in their profit," said Mr Jitti.
Mr Kritcharat said the gold rally could continue on growing speculation the US Federal Reserve will raise its rate only once this year.