BEIJING, Jan. 10 -- Gold futures trading made a strong debut on Wednesday. Analysts believe the gold futures can play a significant role as a hedging mechanism and a speculative instrument in the market.

    Minutes after trading started at 9 am on the Shanghai Futures Exchange, gold futures contracts surged to the daily 10 percent limit.

    The key contract for June delivery was the first to rocket as it climbed 9.98 percent to 230.95 yuan per gram, before closing at 223.3 yuan for the day. Contracts for July-to-December delivery also quickly reached their daily limit rise.

    The total turnover of the seven contracts registered at over 27 billion yuan in the first day of trading, reflecting huge market enthusiasm. But the contract size was set at 1,000 grams, much bigger than the originally expected 300 grams.

    Analysts say this is to discourage individual investors, who do not have the capacity to take the necessary risks. But they say gold futures will be a useful tool for institutions to hedge against price fluctuations.

    China was the world's third largest gold producer in 2006 after South Africa and the United States, with consumption in the manufacturing sector accounting for 9.2 percent of the global total.

    China Securities Regulatory Commission chairman Shang Fulin said gold futures would improve the country's domestic gold market and pricing mechanism. He said it would provide options for financial institutions, gold producers and consumers to protect against market risk, and further develop the nascent futures industry.

    (Source: CCTV.com)