Published: January 9 2008 20:36 | Last updated: January 9 2008 20:36
The strong debut Wednesday for the
Gold prices have been on a record-breaking run in recent months, as investors seek refuge from weakness in the dollar and concerns about the health of the global financial system. The price of spot bullion has gone up 40 per cent since January 2007.
Traders, however, warned that the
Spot gold in
Eugen Weinberg, commodities analyst at Commerzbank in Frankfurt, said demand would be driven “massively higher” following the start of gold futures trading in
The new market traded contracts for about 350,000 ounces of gold on its first day, a level that traders considered extremely positive given the fact that the well-established Comex, the New York-based metals exch-ange, usually trades about 800,000-1m ounces a day.
John Read, precious metals strategist at UBS in
The eight largest gold ETFs now hold about 840 tonnes of gold – more than the official bullion reserves of the European Central Bank.
In the absence of a China-based gold ETF, Suki Cooper at Barclays Capital said there would be strong investor support for the new futures market.
“We expect to see another strong increase in overall Chinese gold demand in 2008 from last year’s estimated 300 tonnes,” Ms Cooper said.
“The launch of the
However, some traders warn that the bullish sentiment among institutional investors contrasted sharply with the dormant market of physical gold trading.
The last rush of gold buying by jewellery makers came when gold traded at $700-$750 an ounce, and traders said that a price correction would be necessary before prices climbed any higher.