gold rush as futures premiere in shanghai

Ni hao!

China's new gold futures market leapt 14% on its debut, breaking through the Shanghai Futures Exchange's daily price-limit on turnover worth $2.75 billion.

GOLD futures made a strong debut on the Shanghai Futures Exchange yesterday with rising investment interest in the precious metal. Most of the new contracts hit the daily trading cap.

The contract offers China a chance to become a key player in the global gold market. It could also be a hedging tool for gold producers and a means to absorb excess liquidity, analysts said.

The trading volume of gold futures totaled 121,468 lots yesterday, compared to 267,516 lots of copper, the most active commodity which has been traded in China for more than a decade.

Au0806 gold, the most heavily traded gold contract, closed at 223.30 yuan (US$30.69) a gram, after touching a high of 230.99 yuan, the daily trading cap. The contract opened at 230.95 yuan. Spot gold ended at 208.83 yuan a gram on the Shanghai Gold Exchange.

"The launch of gold futures is a significant step for China's futures and financial market," said Shang Fulin, chairman of the China Securities Regulatory Commission.

Traders were buying up to the 10 percent daily trading cap on the opening of most contracts, indicating confidence for a bullish run of the precious metal. The benchmark price was set at 209.99 yuan by the Shanghai Futures Exchange on Tuesday.

The first trading was made by two listed companies - Zhongjin Gold Co as seller and Jiangxi Copper Co as the buyer, for six lots.

Analysts and traders are expecting a long bullish run for the precious metal though they said the market would also be very volatile.

Gold hit a 28-year high of US$880 an ounce in New York on Tuesday.

Gold prices soared on concerns of inflation, higher oil prices and a weak US dollar. Some analysts even expect the metal to crack US$1,000 an ounce this year.

The daily trading cap yesterday was 10 percent to attract more trading although the limit will normally be five percent.

The expectation of higher prices will also improve the shares of listed gold miners, said Sun Zhaoxue, chairman of the China Gold Association.

Two listed gold miners rose yesterday, outperforming the benchmark Shanghai Composite Index.

Sun said China is expected to surpass South Africa as the world's biggest producer of gold in two years.

China produced 270 tons of gold in 2007, following South Africa's 290-plus tons. "With production capacity set to grow 20 percent this year, China is expected to become the No. 1 gold producer in two years, if not this year," Sun said.

From: Shanghai Daily

Important turn-around for MON today :)
Tomorrow wil be another important day for holders
Confirmation of upward momentum and ....
Looking very good indeed :)

Cheers from China!