Gold returns to top of DGCX trading chart

Gold dominated the trading charts of Dubai Gold and Commodities Exchange (DGCX) in the first week of this month in terms of volumes among commodities traded on the exchange.

It was a come back for gold which remained in the lower positions (second to fourth) throughout March.

As a trade pattern that could be neatly dichotomised between March and April, the bullion returned to the top of the trading chart of the Dubai-based exchange on April 1 when it recorded a volume of 1,350 contracts (for delivery in June) and 1,478 open interests. On Monday, it recorded a volume of 820 contracts and 1,546 open interests. On Tuesday, it recorded a volume of 1,351 contracts and 1,554 open interests. Each DGCX gold futures contract is worth one kg of gold.

Sajith Kumar PK, CEO of Dubai-based JRG International that trades at DGCX, said the figures show that investors – especially institutional – see long-term confidence in gold.

"The figures show that there are expectations that gold prices will remain strong. It also shows that more and more people want a physical delivery of gold," Sajith said.

The DGCX gold futures contract is physically backed.

Gold volumes on the GGCX platform had been good even in March on the back of companies parking their funds in gold before the end of the financial year (March 31) in countries such as India. But the bullion's performance had been overshadowed in terms of volume by currency futures.

Analysts have been cautiously bullish on gold. While some predicted that gold will touch $1,140 an ounce by the end of this week, the bullion crossed the resistance yesterday and stood at $1,142 an ounce having risen $ 6.89 from the previous day's close. Analysts at MF Global see the bullion next touching $1,145 an ounce and then $1,151 an ounce in the short term.

Meanwhile, the DGCX recorded a 133 per cent rise in volume in the first quarter of 2010, with 495,059 futures contracts traded, valued at $29.6 million. Volume in the January-March period rose on the back of strong demand for currencies, gold and WTI crude oil futures, which recorded volumes of 361,760, 112,077 and 13,457 contracts respectively. Volumes in the first quarter increased by 128 per cent, 133 per cent and 138 per cent for currencies, gold and WTI crude oil, respectively. The Exchange recorded 162,034 contracts in March, valued at $9.7 billion, a 60 per cent increase in March 2009.

"Trading activity was spurred by healthy growth in gold and WTI futures of 91 per cent and 125 per cent respectively," DGCX said in a release.

"The increased demand for DGCX futures is evident from the growth trend in the first quarter of 2010. It endorses the success of our strategy of offering a diversified product mix and liquid markets through tighter prices," DGCX?CEO Eric Hasham was quoted as saying in a release sent yesterday.

Average daily volume in March stood at 4,601 contracts, up 53 per cent on the same period last year.

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