Silver futures trading off to a strong start

Dubai: Trading in silver futures contracts was robust on its launch on the Dubai Gold and Commodities Exchange (DGCX) yesterday as traders rushed to hedge against price volatility of the metal, which hit a 22-year peak on Monday.

Some 750 silver futures contracts had been traded by 4:30pm., nearly twice the 450 odd gold contracts, with July deliveries quoting at $10.935 an ounce. Indian firms SMC Global and Trust Securities struck the first deal.

"The response has been phenomenal and silver has taken a lead over gold. But we expected this from our market feedback. Everybody was asking us why aren't you launching silver?" Framroze Pochara, Dubai Gold and Commodities Exchange's chief executive, told Gulf News.

"Silver has been far more active and far more volatile than gold," Pochara said.

The launch of silver futures contracts is another key step in DGCX's attempt to turn Dubai into a regional commodities trading hub. Trading in gold futures contracts, which the exchange launched on November 23, has grown rapidly in the past four months.

"There is good potential for silver (futures contract trading) to succeed. It has been as volatile as gold and there is sufficient interest in it," said Harish Pawani, a director at DGCX member P.K. Intermark.

Dubai imports nearly 550 tonnes of gold a year to feed regional gold and jewellery demand and officials estimate silver trade is not very much lower.

The emirate's annual estimated jewellery sales of 110-115 tonnes will fuel the need for futures contracts to hedge against gold and silver price movements.

DGCX, the first in the region to trade commodity derivatives, will also launch the Middle East's first currency futures in the next two to three months and trade euro-dollar, yen-dollar and sterling-dollar contracts.

- With input from Reuters

Silver prices near 22-year high

The spot silver market stayed bullish yesterday with prices near the 22-year high hit a day earlier on hopes a proposed exchange-traded fund (ETF) will spur demand, which in turn supported other precious metals.

"Bullish silver prices are boosting overall sentiment in the precious metals market," said Shuji Sugata, assistant manager at Mitsubishi Corporation Futures Ltd.

At 0739 GMT, silver was quoted at $10.89/92 an ounce compared with $10.87/$10.90 late in New York, where it climbed to $10.92, its highest price since September 1983.

The US Securities and Exchange Commission appeared to clear the way last week for final approval of the first ETF that tracks the metal's price, and hedge funds have been buying aggressively.

Firmness in industrial metals such as copper has also brightened the picture for silver, itself heavily used for industrial purposes, as well as other precious metals.

- Reuters