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LBMA Coverage: Market At A Pivotal Point: CME Metals Managing Director

By Kitco News
Monday September 30, 2013 4:58 PM

(Kitco News) - Asian demand is not only playing a key role in the physical gold market but also on the Comex exchange, said Harriet Hunnable, Managing Director Metals of CME Group.

Hunnable spoke to Kitco News’ Daniela Cambone at the London Bullion Market Association/London Platinum Palladium Precious Metals Conference, being held in Rome, Italy; she said the CME has seen a 15% increase in activity over the year so far with most of that growth coming out of Asia.

“This has been a very strong trading year for us,” she said. “Our highest growth is coming out of Asia in terms of trading volume on the Comex,"

Along with an increase in activity from China, Hunnable said that they have seen a lot of activity in options on the exchange. She added the market is at a pivotal point and traders are using options to position themselves to benefit from sharp swings in precious metals prices.

“In August we hit a record of 1.89 million contracts on the Comex of our gold options, a historic record,” she said.

Hunnable added that some traders are also looking at the Comex’s open interest as it could also play an important role in determining the next big price move.

She said that last week more people were buying call options in gold, so traders seemed to be more optimistic that prices are going higher.

“Given what’s happening in the U.S. that is not surprising,” she said. “Coming up to December, watch the open interest of the gold options. That’s telling you what the market’s thinking about.”

Although gold is one of Comex’s biggest contracts, Hunnable said that they have seen strong growth in the silver market as well this year. Silver options contracts actually outpaced gold with a growth of 29%, she added.

A new smaller, 1,000 ounce silver contract, which was introduced on the Comex earlier this year, has also been extremely popular she said.

“[The silver] market is active, healthy, deep and we brought in a smaller contract to enable more participants to trade in a size that is more suitable to them,” she said.

By Neils Christensen of Kitco News nchristensen@kitco.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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