DGCX profits from commodity boom
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DGCX profits from commodity boom

DGCX profits from commodity boom

The boom in the commodity market continues. Last week, on the back on a weakening US dollar, oil, silver and gold prices hit record highs. Gold hit even a level of $1000 per troy ounce and oil (WTI) reached $110 per barrel.

    As long as the dollar weakens, inflation rises and uncertainty remains due to the continuing credit crisis, the environment will be supportive to commodities.

    Investors consider commodities a safe haven amid rising inflationary concerns. The greenback hit multi year lows against major rivals like the euro ($1.56) and Japanese yen, also because of the looming recession and lower interest rates. Investors are concerned about further cuts in interest rates by the US Federal Reserve.

    One of the exchanges which profited from the rising interest in commodities is the Dubai Gold and Commodities Exchange (DGCX). The exchange reported a 66% growth in trading volumes in February 2008. There was a high activity across metals and currencies. Bolstered by a fresh wave of demand, the total volume traded on the exchange in February soared to 117,442, while the total value of transactions totaled $4.58bn (+122.23%).

    Malcolm Wall Morris, Chief Executive Officer of DGCX, stated: "The exchange has charted a strong course for the second consecutive month, reflecting growing favour among investors for the exchange. Trading in February proved to be exceptional as the entire commodity spectrum attracted high interest."

    Gold on the rise


    The average daily volume in February rose 58.46% to 5,592 contracts. "February trade indicates an increasingly diverse portfolio of DGCX, with gold contributing 81.93% to the total volume as compared to 86.46% in 2007. Transactions in Sterling, which is the second largest contract traded, accounted for 10.13%," according to Nishat Bandali, Chief Marketing Officer of DGCX.

    Investors can find quotes and information about products traded on the DGCX website. Not only the DGCX offers contracts in gold and silver, also other futures can be traded. For instance also: Indian Rupee (versus US$), Steel contracts and fuel oil.

    The DGCX will launch four regional plastics futures contracts based on Polypropylene and Polyethylene. According to DGCX: "The contracts will enable companies to hedge themselves and in doing so protect the company financially from any negative effects arising from the volatile prices we have seen recently.

    "Over the next two to five years the region is forecast to see huge volumes coming on line and it is becoming increasingly the preferred location for international polymer production and conversion. The huge growth potential of the regional downstream plastic industry can be seen now and is likely to outpace the ever increasing production levels."

    Time will tell whether these new contracts will be as popular like gold contracts. But the DGCX offers a wide range of products suitable for any kind of investor.

    See also:
    How to ride the gold and silver bull market: Part 1
    A tribute to Marc Faber, part one: US dollar, Nasdaq, gold and oil
    Author
    AMEinfo Staff

    AMEinfo staff members report business news and views from across the Middle East and North Africa region, and analyse global events impacting the region today.

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