Shanghai gold, silver volumes hit records as ShFE opens night trading

SHANGHAI, July 12 Fri Jul 12, 2013 2:28am EDT

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SHANGHAI, July 12 (Reuters) - Trading volumes for gold and silver on the Shanghai Futures Exchange (ShFE) jumped to record highs a week after the bourse launched after-hours trading, driven by a surge in investment and hedging demand as overseas prices fluctuated.

The ShFE launched night trading on July 5 to give investors in the world's second-largest gold importer a tool to manage risk during trading hours in London and New York. The extended hours could give China a better hold in the global gold market.

"The pricing power for main commodities is still decided by trading in overseas market, and any large price movement will not be favourable for domestic investors to control risks," said Sun Yonggang, an analyst with Everbright Futures in Shanghai.

Weekly buy and sell trading volume for the most active gold contract more than doubled from a week ago to 2.06 million lots as of Friday, exchange data showed.

Daily transactions for gold rose to a record of 595,642 lots on Thursday, compared to an average of 483,529 lots in June, the data showed.

Daily volume for the silver contract rose roughly six-fold from a week ago to 2.23 million lots on Thursday.

"The night gold trade will help investors to adjust their positions immediately facing overseas market volatilities and the liquidity for gold night trade looks promising," Sun said.

Before after-hours trading was launched, Chinese investors were often exposed to global price fluctuations in the U.S. and European markets.

Gold slipped on Friday, but remained on track for its biggest weekly gain since October 2011 as fears of an early end to U.S. monetary stimulus subsided and bullion's appeal as a hedge against inflation was restored..

The ShFE's night trading hours run from 9:00 p.m. to 2:30 a.m. local time. Each lot of gold is 1,000 grams and that of silver is 15 kilogrammes.

The country's biggest commodity exchange by contract value trades besides gold and silver - copper, aluminium, zinc, lead, natural rubber, fuel oil and steel. The exchange is also preparing to launch crude oil futures. (Editing by Tom Hogue)

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