Effective hedging tools will be critical for gold traders to maintain business profitability in the current economic climate, according to a senior official of the Dubai Gold and Commodities Exchange (DGCX).
Samir Shah, Chief Business Officer of DGCX said: “Gold prices have had a phenomenal run over the last two years, but the distinguishing feature of the gold market in this period has been the extreme price volatility of the precious metal, which has consistently threatened profit generation.”
DGCX recently hosted a Gold Hedging Workshop for gold merchants, in association with the Dubai Gold and Jewellery Group (DGJG), aimed at explaining the vital need for hedging in today’s volatile economic environment and the tools the Exchange offers to help them protect their profits. “The DGCX Gold Futures contract provides an exceptional tool for hedging price risk exposure in today’s market, allowing participants to profit when the market moves in either direction,” said Shah.
Biju Joy, General Manager of the Dubai Gold and Jewellery Group (DGJG) said: “The workshop was an excellent opportunity for Dubai’s gold merchants to understand the various strategies they can adopt to manage gold price risk using the DGCX platform. The Dubai Gold and Jewellery Group is committed to work with institutions like DGCX to support the development of the gold market in Dubai.”
He further said: “Since the Exchange is regulated by the Securities and Commodities Authority (SCA) and provides a government-owned central clearing system, gold merchants can trade with the confidence that their trades will be settled. Hedging gold using DGCX Gold Futures, as opposed to products of other international exchanges, also allows Gold merchants to ensure that their capital does not leave the UAE and that they incur very low transferring costs.”
DGCX expects increased interest in Gold Futures trading on its platform and the Exchange is well positioned to meet this increased demand. In June, DGCX Gold Futures volume increased 111% compared to the same month last year on the back of heightened trading spurred by increased price volatility. The volume rise is also a result of significant steps taken to enhance the DGCX Gold Futures contract.