The trading volume in gold futures rose by 30 per cent to 4,000-5,000 contracts a day as investors moved from the stock market to the futures market over the past few days in response to the rising gold spot market.
Previously, gold futures were traded at the average of 3,000 contracts a day, said Nuttapong Hirunyasiri, managing director of MTS Gold Futures.
"The Greece crisis is similar to the tom yam kung crisis [Thailand's financial crisis of 1997], which had a domino effect across the region," he said.
Bullion for immediate delivery rose to an all-time high of US$1,234.93 (Bt39,900) an ounce before trading at $1,233.55 an ounce at 1.29pm in Singapore. June-delivery futures jumped as much as 1.3 per cent to a record $1,235.50 an ounce. It climbed to a record for a second day.
Gold advanced as the euro extended losses against the dollar on doubts whether the multibillion dollar loan package will be able to prevent Greece's sovereign debt crisis being repeated in other European states.
Gold climbed to a record for a second day on investor concern that international financial support for indebted European states would depress currencies.
"All we can do is to put our money into real assets because paper money everywhere is being debased," Jim Rogers, Singapore-based chairman of Rogers Holdings, told Bloomberg Television yesterday.
Gold has climbed 12 per cent in 2010, and is heading for its 10th consecutive annual gain. This year, the euro has dropped 12 per cent against the dollar, the MSCI World Index of major equity markets fell 2.1 per cent and returns on benchmark US treasuries advanced.
Nuttapong said there was no confidence that the package on Greece's sovereign debts would be sustainable.
"The gold futures price is now correlated with euro rather than the US dollar and gold now becomes a kind of safe-haven asset," said Pawan Nawawattanasub, president of YLG Bullion & Futures.
She added that gold futures trading was in accordance with the gold price traded in the spot market.
Pawan said the bullion gold price is possibly seen for a long run, buoyed by a weakening of the euro as there is less confidence in holding the euro. "The gold is possibly testing the level of $1,250 an ounce," she said, adding there would be profit-taking in the short term.
Investors were advised to trade gold futures in the very short term so that they would not hurt much when the price of gold swings back.
The Gold Traders' Association yesterday quoted the following prices:
Bullion gold: Buying - Bt18,700 per baht, Selling - Bt18,800 per baht
Gold ornaments: Buying - Bt18,343.56 per baht, Selling -Bt19,200 per baht.