Dubai sitting on a gold mine with $75 billion in Gold trade in 2013
The value of gold traded through Dubai stood at $75 billion last year, representing 40 per cent of the world’s physical gold trade, according to Ahmad Bin Sulayem, Executive Chairman of the Dubai Multi Commodities Centre (DMCC).
The trade of 2,250 tonnes of gold in 2013 marks a 73 per cent increase compared to the previous year. The value of gold traded in 2012 at the DMCC was $70 billion.
Dubai is expected to be ranked second after London in terms of gold trade, according to Pradeep Unni, head of research, strategy and trading at Richcomm Global Services.
“When establishing DMCC, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, vice president and prime minister of the UAE and Ruler of Dubai, announced that in the coming years, Dubai will capture 50 per cent of the gold market,” said Bin Sulayem, who was speaking at the Dubai Precious Metals Conference 2014 in Dubai, which opened on Sunday and will run until Monday.
Established in 2002, DMCC is a free zone with over 8,300 registered companies aimed at promoting and regulating the gold industry.
The growth in gold traded through Dubai can be attributed to a number of reasons including the transparency of trade, location and rising number of tourists, says Unni.
He explained that the emirate’s imported and exported gold is pure. Also, gold jewellery stores cater to different demand segments. He pointed out that tourists, especially from India, account for the majority of gold consumption in Dubai.
“70 per cent of gold consumed in Dubai is through the tourist population,” he said.
By 2020, when Dubai is expected to attract 20 million visitors per year, he expects that gold traded through Dubai to increase further. Given the strong demand for gold, more gold jewellery stores are opening across the emirate, he said.
Meanwhile, DMCC is planning to list a spot gold contract on the Dubai Gold and Commodities Exchange (DGCX) in around a month, according to Bin Sulayem.
“A similar contract was listed on Nasdaq. I personally was not happy with the volumes even though there were days [when] it was [the] highest in volume.. [the contract] was dismantled,” he said.
“I follow the volume traded on DGCX, that’s what I care aboutâ¦ the value doesn’t mean much to me,” he added.
Unni said that the gold traded will be at Dubai Gold Souk prices, adding that it will add value to trade in Dubai.
According to Bin Sulayem, Dubai has become a benchmark for maturing cities, including those in Africa.
Africa is a major source of metals including gold, silver, platinum, palladium and rhodium, which flows through Dubai and then to Europe, says Unni.