Gold futures trading on DGCX climbs amid coronavirus concerns

The exchange sees year-to-date volume growth of 773.6 per cent in gold futures

The new policy to boost gold trade in UAE consists of 10 strategic programmes and initiatives. Reuters

Gold futures trading on the Dubai Gold and Commodities Exchange (DGCX) is spiking as investors flocked to safe-haven assets in the wake of the coronavirus outbreak that threatens to slowdown the global economy.

The year-on-year volume growth of gold futures contracts stands at 773.6 per cent so far this year, aided by a multi-year record in January, the exchange said in a statement on Monday.

Total volumes in February hit 1.49 million contracts, while year-to-date Average Open Interest (AOI) was 367,878 contracts, up 51.1 per cent during the same period in 2019.

“Unforeseen events during the first two months of this year have sent shock-waves across global markets. Investors are bearish on the global economy and increasingly turning to products that can help them manage their risk,” Les Male, chief executive of DGCX said.

“This is reflected in the trading we are seeing on the DGCX, in which a greater number of investors are recognising the value our products offer for hedging purposes.”

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The novel coronavirus, which originated in China, has spread rapidly since mid-January to 60 countries, with the global death toll topping 3,000 and more than 89,000 recorded cases.

DGCX also said on Monday it is planning to start new FX (foreign exchange) products, including the launch of FX Rolling contracts – perpetual rolling FX contracts for three currency pairs. It already offers contracts on G6 currency pairs, and said trading across these grew 18.1 per cent in February, with an underlying value of $7.2bn. A futures contract on the euro and US dollar is its most actively-traded pair, with 76,595 contracts traded last month - a 41.1 per cent month-on-month increase.

The DGCX’s INR (Indian Rupee) product portfolio was another driver of trading last month, on the back of President Donald Trump’s visit to India. INR Mini Futures was the standout performer, trading 113,521 contracts, up 43 per cent month-on-month and 9.6 per cent year-on-year.

“The rest of the year promises to be particularly busy for us, as we prepare to launch new, locally-relevant products to provide our members with a wider range of tools to safely protect their investments,” added Mr Male.

DGCX is a subsidiary of Dubai Multi Commodities Centre, a government authority for trade, enterprise and commodities.