HONG KONG, Oct 20 (Bernama-BUSINESS WIRE) — CSOP Gold Futures Daily (-1X) Inverse Product (stock code:7374.HK) will be listed on Hong Kong Stock Exchange on 20 October, 2021. As the first inverse commodity product issued in Hong Kong, 7374.HK provides investment results closely corresponding to inverse (-1x) the daily performance of Solactive Gold 1-Day Rolling Futures Index (the “Index”) by using a combination of a future-based replication strategy and a Swap-based synthetic replication strategy. 7374.HK attracted USD 12 million initial investment. The inception price per unit is around HKD 7.8 with trading lot of 100, and the entry investment is approximately HKD 780. Before 7374.HK, CSOP Gold Futures Daily (2x) Leveraged Product (stock code: 7299.HK) was launched on 5 June, 2020. Having accumulated USD 248.3 million in size and recorded HKD 30.37 million average daily trading volume as end of August 2021, 7299.HK is extensively invested by Hong Kong investors to express their positive view to gold price in the long run. ¹Meanwhile, the listing of 7374.HK will help investors to handle the volatility and downtrend of gold price in the short run.
Gold has long been seen as a store of value and an important alternative to currency. The price of gold usually fluctuates around and is negatively correlated with US dollar over the long term. On 15 March, 2020, the Fed announced to carry out unlimited QE policy to increase the liquidity of U.S. banks. Its balance sheet has almost doubled from USD 4.31 trillion on 11 March 2020 to USD 8.33 trillion on 24 August 2021². Since then, along with the global panics over Covid-19, gold futures price has peaked due to the concerns over inflation in July 2020³. Fed is likely to plan tapering the QE gradually and bringing monetary policy back to normal in view of an economic recovery. When the Fed’s balance sheet is shrinking, it will pull out the liquidity from the market which could strengthen USD, thus inducing more uncertainties to gold prices in the short term. In addition to QE, major economies also lowered interest rates to stimulate the economy. At the outbreak of the pandemic, the Fed has trimmed the interest rate down from a previous target range of 1% ~1.25% to almost zero.⁴ Now, in response to a higher risk of inflation, the Fed is expected to wind down its pandemic-era stimulus program and raise the interest rate in near future. With a market consensus on a stronger USD, the gold prices may see a bigger swing in the following time.
