The total turnover in Dubai gold contracts has reached $128 billion since they were first launched on the Dubai Gold & Commodities Exchange, with the volume of contracts passing three million for the first time in May. A statement from the DGCX said with volumes surpassing three million contracts, the exchange had “entered a new phase of development.” CEO Malcolm Wall said: “Despite the uncertainty of the global market, participants continue to favor futures contracts to hedge and balance their portfolios. The understanding of derivatives in the region, their usage and benefits is continuously improving.” In the current year the volume of contracts has exceeded 410,000. Dubai is known as The City of Gold and chose to launch derivative trading with its favorite precious metal, but a broad range of commodity futures contracts are now listed on the DGCX. Trading in Dubai Gold Securities (DGS) on Nasdaq Dubai has clocked a record 460 percent jump in volume so far this month. The number of DGS contracts has risen to 12,589 with a value of $1.15 million (AEDh4.2 million) in May - higher than March (6,865 contracts) and April (2,246 contracts) put together. DGS was listed on March 2 this year. “We are pleased to see growing interest in DGS from investors as they become more familiar with the product, especially those seeking a Shariah-compliant opportunity,” said a Nasdaq Dubai spokesman. “DGS is the only gold-backed security on any GCC stock exchange and it can be bought and sold through a broker just like shares.” There are still eight more sessions to go during the current month and this gives further scope for DGS to generate more volume. The gold price, which is hovering at a six-week high as fears of rising prices maintain the yellow metal's allure as a hedge against inflation, is likely to drop as the market moves into an overbought position. Gold had been rising towards a seven-week high though investment in gold-backed exchange-traded funds (ETFs) has halted after a recent gain. Pradeep Unni, senior research analyst, Richcomm Global Services, said: “Buying still seems to be emerging largely on the technical momentum rather than fundamental support. The recent price rally may taper off quickly once the overbought momentum indicators start to turn back.
