Asia’s Growing Gold Demand Fuels Surging Derivatives Market

Originally Posted 26 August 2025 – Asia’s Growing Gold Demand Fuels Surging Derivatives Market

Author: Cameron Liao

At a Glance

• As of Q2 2025, 42% of global Micro Gold futures trading volume occurred during Asian hours (defined as 6 a.m. to 6 p.m. Singapore time)

• China and India accounted for over half of global gold consumer demand last year

Gold has experienced a significant bull run over the past two years, with prices increasing by 12% in 2023 and a further 29% in 2024. Gold has continued its strong performance in 2025 as a perceived safe haven amid concerns over uncertainty around trade policy, expected cuts in U.S. interest rates and heightened geopolitical risks. The price surged above $3,000 per troy ounce in March for the first time and is trading near $3,400 as of early August.

Past performance is not indicative of future results

Asia: The Engine of Global Gold Demand

Gold, considered a symbol of wealth and a store of value, is highly prized in Asian cultures. China and India, with a combined population of 2.8 billion, have strong jewelry and investment demand, making them the world’s two largest gold consumers. Collectively, these two nations accounted for over half of global gold consumer demand in 2024, according to data from  industry group World Gold Council (WGC). Other economies in Asia, such as Thailand, Malaysia, Vietnam and South Korea, are also significant gold consumers. With gold prices hitting recent record highs, the precious metal is garnering even more attention as an investment asset and a safe haven amid geopolitical risks.

Past performance is not indicative of future results

Derivatives Trading Gains Traction in Asia

Asia’s strong appetite for the yellow metal is increasingly extending to derivatives trading. Liquidity in COMEX Gold futures (GC) during Asian hours (defined as 6 a.m. to 6 p.m. Singapore time) has surged with gold prices. Historically, Asian hours volume accounted for approximately 25% of total trading volume; this share grew to over one-third in the second quarter of 2025. This increased trading activity during Asian hours reflects growing interest in derivatives trading from market participants in the region, which in turn facilitates more efficient price risk management.

Micro Gold Experiences a Surge in Trading Volumes

The growth in liquidity is even more pronounced in Micro Gold (MGC) futures. This contract, sized at 10 troy ounces (one-tenth of the benchmark 100 troy-ounce Gold futures), caters to traders seeking exposure in smaller lots, which is especially pertinent given the rising gold price. Daily MGC volume, which typically ranged from 50,000 to 60,000 contracts before the recent price surge, now averages near 300,000 contracts per day. Concurrently, the share of Asian hours activity has also significantly improved. As of Q2 2025, volume during Asian hours represented approximately 42% of global MGC trading, a 16-percentage point increase compared to two years ago.

Micro Gold futures also show competitive bid/offer spreads, measured in minimum price fluctuations, or ticks. The spread is commonly used to gauge market liquidity and has a direct impact on trading cost. Overall, Micro Gold futures consistently exhibit stable liquidity, with the  bid/offer spreads averaging 2.01 ticks across all trading hours*. The market shows an even tighter spread of 1.98 ticks during Asian hours, reflecting increased activity in the region/time zone.

Past Performance is not indicative of future results.

Gold to Remain Center Stage

Looking ahead, gold prices are expected to remain a key focus among investors amid prevailing  trade, monetary policy, geopolitical and economic uncertainties. A 2025 central bank survey by the WGC revealed that 95% of respondents anticipate global central bank gold holdings to  continue growing in the next 12 months, underscoring gold’s perceived role as a safe haven, a hedge against geopolitical risk and a store of value. 

Factors such as ongoing geopolitical conflicts, potential changes to U.S. interest rates, tariff policy adjustments and evolving central bank reserve strategies could be supportive for gold. Conversely, record-high prices and slowing economic growth could dampen jewelry consumption. Profit-taking, potential market corrections and competition from other investment assets might also temper the gold rally. Gold is poised to remain the center of attention as market participants navigate these complex dynamics.