Increased trading pushes up gold volume

The average daily volume (ADV) on the Dubai Gold and Commodities Exchange (DGCX) reached the year's high owing to increased trading activity on the back of renewed fears about the recovery prospects in the global economy. The week ended June 27 witnessed the year's high ADV at 11,450 lots, doubled from the first week ADV of 5,705 lots on the DGCX.

The previous highest ADV of 10,559 lots was recorded in the last week of February that witnessed short buying owing to increasing fears among investors about possible resurface of recession for Europe, North America and Japan. The ongoing euro zone sovereign debt and speculation about bleak recovery prospects in global economy brought commodities into limelight last week.

Kamran K McGee, Head of Sales Operations (Mena) at GTL Trading, DMCC, told Emirates Business: "Basically, euro, pound and gold are adding to the volumes on the DGCX. In addition to the institutions and traders involved in foreign trade, retail investors are participating in trading in a big way. The main attraction for retail investors is secured trading in a regulated environment on the DGCX. This made retail investors confident on margin trading in regulated environment."

"Last week, there was short covering taking place in the market as it gave recovery. Also the DGCX market moved in both directions giving the trader both opportunities to buy or sell, there by resulting in huge volume," Nadeem Khan, Senior Business Development Manager at Century Financial Brokers.

The trading in commodities during the week was in broad range as renewing investors' concerns on overall economic conditions and pressure on equity values, limited the commodity price gains during the previous week. Barring gold and silver, remaining all currency pairs and oil futures closed the week on higher side as euro against US dollar (DEUR) gained 0.11 per cent to end the week at $1.239 showing $1.247 high and $1.222 low during the previous week.

Stable trading in new currency pairs

The newly-listed currency contracts on the DGCX are showing steady upward movement in terms of volumes. The DGCX launched Australian dollar (DAUD), Canadian dollar (DCAD) and Swiss franc (DCHF) against the US dollar on June 15 amid growing demand from participants.

About 1,169 contracts traded in the new three currency pairs till June 25, giving an average turnover of $40.25 million (Dh147.7m).

"Our wider currency offering provides participants with further financial tools to manage exchange rate volatility. The new contracts meet the hedging and investment requirements of participants, while also enabling them to gain exposure to the strong economic fundamentals of these currencies," said Eric Hasham, Chief Executive Officer, DGCX. "The recently-introduced currency pairs represent major economies and their growth potential is very bright in the days to come," said Kamran K McGee.

Indicating the encouraging response from investors and institutions, the first week of trading in the new contracts recorded a total of 881 of contracts valued at $40m.

"The addition of three new currencies pair has enhanced the DGCX currency portfolio and given the investors more alternative opportunities to trade in, as the wider platform of the DGCX will bring in more investors," said Nadeem Khan. The new contracts are sized at 50,000 currency units per contract and are price quoted in US dollars.

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