In order to make up the ‘gap' of trading time between the domestic gold market and the international market, get the domestic gold price geared to the international price, meet the trading demands of investors, avoid price risks, and improve the domestic gold market structure, the Friday night offer trade of Shanghai Gold Exchange (SGE) was launched officially, and the first transaction was accomplished by Ms. Yang, a customer of Industrial Bank (IB).
As learnt by the reporter, in recent years, all countries issued the “quantitative easing” monetary policies. Considering that precious metals have the property of value maintenance and value incremental, with the introduction of friends, Ms. Yang went to IB and opened an agency precious metal trading account of SGE after the Spring Festival.
“The precious metal deferred delivery products exclusively provided by SGE are suitable for white collars to make investment. Adopting the security model, such products can help you earn big profits with a little capital and enlarge the gains. With the short selling mechanism, profits can be gained as long as you choose a correct direction no matter the precious metal price goes up or down. What's more important is that the starting point for investment is low, for instance, it only requires more than RMB 1,000 to make investment in the silver deferred delivery product.” Upon the mention of precious metal investment, Ms. Yang looked very excited.
Nonetheless, SGE did not have a night market on Friday previously. The international market was still available for trading while the market was closed at home, and this was a fly in the ointment in the eyes of many investors. Now, this situation has been overthrown. One day in the last ten days of May, Ms. Yang received a call from a wealth management manager of IB, from whom she knew that SGE would release the Friday Night Market at the end of May. In the meantime, the Weixin (Wechat) account of “IB Wealth Management Center” followed by Ms. Yang also gave a detailed introduction to the Friday Night Market. Ms. Yang said in great delight: “The fluctuation of precious metal price mainly happens in the evening. Now, with the night market, I can handle my investment whole-heartedly after coming off work!” In the evening when SGE released the Friday Night Market, she waited in front of computer specially, and made a transaction according to the plan worked out before. Luckily, her pending order became the first transaction coincidently, and hence, the transaction of great significance to China's precious metal market.
Obviously, the Friday Night Market brings more trading opportunities for investors. Jiang Shu, a senior precious metal analyst of IB, indicates that the short-term fluctuation in gold price is often significant on Friday as the gold price and USD exchange rate are closely related with each other and Friday is the date for the release of important data about US economy such as unemployment rate and non-agricultural employment data. However, as SGE did not have the Friday Night Market, investors with a weak resistance to risks could not control risks effectively nor investors with high resistance to risks could grasp opportunities. The launch of Friday Night Market will bring more trading opportunities and better risk control for investors.
Meanwhile, the night market can also reduce the risks of investors. As indicated by Xu Huanming, General Manager of the National Operation Center of Huamao Gold, a SGE member and the designated training institution for gold traders, many international risk events occur in the evening of Friday, and especially in the evening of the first Friday of each month, the non-agricultural data of US will have a significant influence to the quotation of precious metal deferred products. The most important function of the Friday Night Market added by SGE is not merely to bring more opportunities for customers to gain profits with the products, but more to reduce the position risks and trading risks of investment customers. This is a great step made by SGE to draw its trading products nearer to the market and provide better services to the investors.
In addition, the night market is also in favor of increasing the trading volume. Ge Zixiong, General Manager of Shenzhen Gold Information Co., Ltd., a promotion institution of market quotation authorized by SGE, also believes that it completely links both domestic and international gold markets in terms of time segment to launch the Friday Night Market. Domestic investors can respond to the influence of economic changes around the globe to the gold market more easily, grasp investment opportunities or restrain risks in a timely manner. It will improve the trading volume both qualitatively and quantitatively to attract more funds into the gold market of SGE, and this will build a solid foundation for the Chinese gold market to compete for the gold pricing right.
Against the general backdrop that acute fluctuation occurred in the precious metal price and US dollar went strong in recent days, Jiang Shu indicates, it is not proper to maintain the bull market mindset in the past 12 years, and the key to gain profits in the current precious metal market is the two-way trading mechanism which can do short selling and long selling with precious metal deferred delivery products in a flexible manner.