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Volatile gold prices boost trade on Dubai exchange
DUBA I— Volatile gold prices lifted trade on Dubai’s fledgling gold futures exchange to more than 100,000 contracts worth $2.2 billion in May and June, the exchange’s latest figures show.
The volume was still far lighter than on established exchanges such as New York’s COMEX, where more than 34,000 lots of 100 ounces (3.11 kgs) each were traded on Friday alone. Contracts traded on the Dubai Gold and Commodities Exchange (DGCX) are for 1 kg each.
Analysts said, however, that the numbers were a boost for the Dubai exchange as it seeks to position itself as a global hub for gold trading.
Dubai, a centre for the physical gold industry in the Middle East and Asia, launched gold futures trading last November and has seen volumes steadily increase.
Contracts traded in May and June, when gold prices jumped to more than $700 per ounce and then dipped under $600, account for half the number of contracts traded since the exchange opened.
“We are satisfied with the kind of volumes we are seeing on gold futures although we have a long way to go compared to other international markets,” DGCX Chief Executive Framroze Pochara told Reuters in an interview. “The volatility (in May and June) helped build volumes.”
The number of contracts traded in May and June reached 107,199, a 32 per cent jump from the previous two months. Total traded value on the exchange between November and June was about $4.2 billion.
“I think the number of traded contracts in May and June was a good sign,” said Jeff Rhodes of Standard Bank in Dubai. “I think it was beyond the expectations of the exchange when it first started and to get up to this critical mass within six months is very important.”
Pochara said the exchange signed up its first market maker last week and would add four to five more within a few months.
Market makers add liquidity by quoting both buy and sell prices. Pochara declined to name the market maker.
“That will be a tremendous boost for the market,” he said. ”Right now a lot of people want to trade on the exchange but there needs to be more liquidity.”
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