The average daily trading volume of mini gold futures contracts has reached a record high, and retail demand is often highly correlated with the price of gold.
Retail investors have flocked to the e-micro gold futures contracts of the CME Group Inc., and the price of this precious metal has also reached a new record.
According to data from the largest derivatives exchange in the USA, as of September 11th, the average daily trading volume of e-micro gold futures contracts (an important indicator for assessing liquidity and activity levels) was 99,527 contracts, surpassing the total trading volume for the whole year of 2020, when it reached a historical high of 86,101 contracts.
Investors have been rushing into gold as more and more people expect the Federal Reserve to soon enter an interest rate cutting cycle. With ongoing geopolitical concerns such as the Middle East, Russia-Ukraine conflict, and the upcoming US presidential election, gold is also seen as a safe haven asset. In addition, global central banks need to diversify away from the US dollar reserve system, which has also helped boost the price of gold.
In the midst of its continued success, some investors are betting that the company's seemingly unstoppable rise is about to come to an end.$E-micro Gold Futures(DEC4) (MGCmain.US)$ As gold prices continue to soar amid strong growth, it has rebounded over 20% this year. Spot gold $XAU/USD (XAUUSD.CFD)$ On Thursday, it reached a new all-time high of $2,560.13 per ounce.
Jin Hennig, global head of metals at CME Group, said in an interview that retail demand is closely related to the price of gold, especially when the price is rising. "This has been the case since the end of last year and continues into this year."
CME Group introduced e-micro gold futures contracts in October 2010, targeting retail investors. This is one-tenth the size of the exchange's benchmark gold futures contracts.
"We are moving towards a lower interest rate environment, so gold is becoming more attractive... I think we may cut interest rates more frequently, rather than by a larger magnitude," said Alex Ebkarian, CEO of Allegiance Gold.
In a low interest rate environment, gold is often a preferred investment. Phillip Streible, Chief Market Strategist at Blue Line Futures, said, "The job market remains weak, and if the job market deteriorates, the rate-cutting journey will continue for a longer period of time."
Editor/Rocky