Precious metals and energy see trading surge in APAC amid market volatility: FOW Asia 2026

Speaking at the FOW Asia 2026 conference in Hong Kong on Thursday, panellists said that they are seeing a pickup in precious metals and energy trading, driven by geopolitics and price volatility.

Against a fast-moving geopolitical backdrop, one panellist said that clients have shifted from asking about market access to efficiency.

“With margin increases in energy, clients are looking at ways to deploy cross margining both between exchanges as well as between exchanges and over the counter products, and how to optimise flow better,” said the panellist.

The proliferation of multi-strategy hedge funds has meant that financial players from the buyside have added to their commodities team hiring, the panellist added.

“Gold has been a key story, particularly with central banks buying 1000 tonnes in the last three to four years,” said the panellist. “This has doubled compared to the prior decade, partially driven by the geopolitical landscape.”

On regulatory fragmentation, clients are looking at changes such as nickel mining quotas and DRC copper bans which are having a ripple effect on markets.

“Clients are actively looking at how to optimise portfolios and understand how margining is impacted,” said the panellist.

They observed that with growing consumption of base metals, Asia is quickly developing local and regional benchmarks rather than just being a price taker of the LME and CME, offering more avenues for participants to find meaningful hedges.

Elsewhere in the region, an India-based panellist said that there’s been a “sea change” in the country’s commodities market as it becomes more bank-driven and institutionalised.

“The regulator has allowed mutual funds, alternative investment funds and foreign portfolio investors access to the commodities market,” he said.

He is seeing interest particularly on precious metals such as gold and silver. The development of electronic gold receipts has also driven interest in using derivatives as investment products rather than for speculative purposes.

Newer products such as the Mumbai rain contract and steel scrap contract will also add to the choices available to market participants.

“We’ve seen a structural shift with central banks buying more gold and reserve managers are bullish and want to increase their gold holdings,” he said. “With geopolitical tensions, it’s all about safety. Both governments and investors want to hold gold in times of conflict. They’d rather have gold in a vault than dollars in a bank account.”

Beyond metals, the power market in APAC has seen massive growth, particularly in Japan.

“Electricity markets in the region have become highly digitised, allowing for more comprehensive modelling and load forecasting,” said Steffen Riediger, director of business development, power derivatives and global commodity markets at EEX. “This has opened up space for new participants.”

Riediger noted that in Asia Pacific, there has been an evolution of power derivatives contracts moving from bilateral over-the-counter (OTC) markets to the cleared space.

“The Japan power market didn’t exist 10 years ago but it’s now the fastest growing power market in the world,” said Riediger. “We’ve seen volume growth of more than 100% year- on-year, with more participation in Hong Kong, Singapore as well as globally.”

As an asset class on its own, power is becoming an investable asset class, added Riediger.

He highlighted the importance of having a healthy mix of physical hedgers and financial participants.

“We need both because financial participants are able to take on long-term risk, such as hedging for up to six fiscal years in advance,” said Riediger. “Before the financial players came, there just wasn’t anyone to absorb the risk.”

The market has a 50-50 split between physical and financial participants, as well as international and domestic players, but Riedger believes the market can be further expanded.

“Looking beyond Japan, Hong Kong and Singapore are key energy trading hubs, as well as Australia and New Zealand,” he said. “We’re even seeing participants based in APAC trading European intraday markets on a 24/7 trading basis as well.”

EEX has worked closely with regulators such as the Monetary Authority of Singapore, and Japan’s Ministry of Economy, Trade and Industry and other financial market regulators in the region to ensure participants can trade frictionlessly.

With the growth in data centres in the region, Riediger believes that power markets are primed for growth.

“The AI story is the electricity story,” he said.

As data centres need an investment horizon of at least 10 years and require 24/7 electricity, they are creating hedging demand.

“Banks want to see cash flow and the strategies on how businesses can recoup long-term capital investments,” said Riedger. “The power derivatives market can provide the right price points, hedging and clearing infrastructure to address this.”

Offering an institutional buyside perspective, another panellist highlighted the importance of market integrity and transparency as information asymmetry persists.

“It’s important that commodity prices are reflected on exchanges and OTC contracts,” he said. “The transparency and consistency in standards enable more participation which helps to drive liquidity.”

For instance, he pointed out that for hedge funds, it’s challenging to participate in the rare earths trading market as liquidity tends to be low and there’s a high cost of participation. As well as different regulations on margin and clearing, the increased cost is passed down to the end customer.

“It becomes even more expensive when you take into account geopolitical changes in trade laws, export control sanctions and potential tariffs,” he said. “As financial investors, it’s a challenge to develop the capability to separate the noise from what’s important.”

Commodity and energy trading desks are increasing their use of real-time and alternative data as artificial intelligence allows firms to process larger datasets and respond more quickly to volatile markets, according to Burton-Taylor International Consulting.

Hong Kong’s first five-year plan points to the development of RMB-denominated gold and commodity markets, while strengthening cooperation with mainland Chinese exchanges including the Shanghai Gold Exchange, Shanghai Futures Exchange and Qianhai Mercantile Exchange.