Gold and dollar/euro (Deur) futures are top volume churners on Dubai Gold and Commodities Exchange (DGCX) so far this week regardless of price fluctuations in the both instruments.

The yellow metal has been moving upwards this week, while euro slipped.

Dubai Gold (DG) futures on DGCX were trading higher at $1,124 as against the previous closing figure $1121.70, while the bourse witnessed the highest volume recorded in gold futures which clocked 1,093 contracts.

DG futures witnessed trading of 1,093 contracts highest trading in any instrument on the exchange on Tuesday followed by trading of 331 contracts in Deur pair.

"Investor sentiment has been attracted towards gold and euro, as uncertainty and volatility in the market have resulted in speculative activities. Gold prices will broadly range between $1,150 and $1,080. However, gold price may retreat as stocks on global bourses are performing good.

Hence, investors tend not to invest in gold, but volumes will remain robust as active trading is likely to continue," Nadim Khan, Senior Financial Analyst at Century Financial Broker, told Emirates Business.

"Gold is rangebound as it is neither breaking $1,140 nor slipping below $1,080. When this happens it will attract lot of day trading, which is happening now. We see many of our new clients are also entering into gold. It's not investment interest, but trading interest," said Pradeep Unni, Senior Research Analyst at Richcomm Global Services, DMCC. "Short-selling is also one major reason for good volumes in the DG."

Deur was trading on DGCX at 136.02 yesterday from 136.27 on Tuesday. The Deur pair has been highly volatile ahead of reports on Europe fiscal data. The trading volume in Deur on DGCX was 304 contracts on Tuesday, 1,270 contracts on Monday and 1,407 contracts on Friday, while the price quote was range bound at 136.02 cents per euro.

"The budget concerns in Ireland, Italy and Spain caused pressure on euro, which is technically in the 'oversold' position," said Khan of Century Financial.

Indicating the sustained demand for its commodity and currency derivatives contracts, DGCX witnessed an all time high volumes on March 1 as the exchange recorded trading of 19,255 contracts valued at $1.27 billion. Euro/dollar futures record highest daily volume and notional value at 11,546 contracts and $783 million.

"The daily record on DGCX firmly endorses the success of our business strategy and the diversified product range of the exchange which meets the needs of our market participants. The sustained growth and record daily volume is also testimony to the Exchange's efforts, in conjunction with its members and market makers, to strengthen liquidity by providing competitive spreads and prices," said Eric Hasham, Chief Executive Officer of DGCX.

Breaking all earlier records, daily volume on DGCX exceeded the previous daily high of 14,066 contracts on July 11, 2008. The record trading activity was supported primarily by increased volume in currencies. Interest was most significant in the euro/dollar futures contract, which also achieved a record daily volume and notional value of 11,546 contracts and $783m.

However, dollar/pound (DGBP) pair on DGCX witnessed encouraging volumes as it was trading marginally lower at 149.94 cents per pound. Fresh worries about Europe's fiscal health put the DGBP under pressure. The euro eased 0.1 per cent against the US dollar, trading around $1.3590. Europe's common currency had come under fresh pressure after the Fitch ratings agency said it still has a negative outlook on Portugal's credit rating.

The US dollar stabilised as investors fled from the euro and sterling following destabilising comments from Fitch and Moody's.

"Recent developments in the euro zone made the Deur pair very volatile on speculative deals. Pound became very active. Fitch downgrading pushed the pound down, but it attracted lot of day trading," said Unni.

On the other hand, spot prices after being stable for a week started picking up. Yesterday spot gold prices in Dubai market were up at Dh126.25 per gram from Dh125.75 per gram of 22 carat on Tuesday, while prices for 24 carat rose Dh134.75 from Dh134.45. The gold price was stable at Dh1360 per 10 grams on Sunday and Monday.

Gold was around two per cent below a 6-1/2-week high near $1,150 hit in early March this year.