New Steps to Bolster Gold Trading in the UAE

The Emirati cabinet recently announced a new policy aimed at boosting gold trading in the country. With gold and jewellery trading responsible for 20% of the United Arab Emirates’ non-oil exports, it’s no wonder that the authorities have worked to implement policies aimed at positioning this part of the commodities trade firmly. What changes are to come? We’ll explain the measure they introduced in this announcement.

 

gold trading in dubai

 

A new answer to “how to trade gold in the UAE”

The new UAE government policy for the gold trade consists of a federal platform governing the gold trade and the tracking of gold sources. While the gold trading platform led off the press stories about this new policy, the manoeuvre was just one of the ten strategic initiatives that form part of the efforts to bolster the position of the Emirati gold trade. 


The policy surrounding gold includes three pillars: governance, innovation and sustainability. The federal gold trading platform is an example of the governance pillar as the Emirati government seeks to standardise gold industry governance across the Emirates on both a national and local level. What was the overall response to the announcement? Schubert Commodities Consultancy DMCC’s Founder Gerhard Schubert concluded that the move signals that the government recognises the gold trade’s importance to the economy of the United Arab Emirates. 


What’s more, noted Schubert, is that it is another effort on the part of the Emiratis to increase the ease of doing business: “Before this announcement, the gold industry in the UAE was fragmented in different emirates and free zone and non-free zone entities and now it [will be] pretty much streamlined[.]” Not only did we previously mention that the gold industry plays a particular weight in the UAE commodities trade, but it is also a lucrative one. The Dubai Media Office noted that in the first half of 2019, the value of the Emirati gold, diamond and jewellery trade saw a three per cent year-over-year increase totalling 180 billion dirhams. 

 

The UAE gold trade: from regional to global

We can see the innovation pillar at the heart of this policy from the fact that the platform aims to track the sources and the government’s goal of incorporating technology into gold production. As the official press release noted:  

 

The policy is designed to develop mechanisms and initiatives to maximise the benefit of the gold and jewellery trade, transforming the UAE from a regional hub to one of the global producing countries and leading designers. This will ensure the stability and prosperity of UAE’s gold trade, raise its competitiveness and maintain the leading position of the country as an important global hub.

 

The gold trading platform, in particular, is especially indicative of this trend because tracking the gold’s origin seeks to boost the transparency in the Emirati commodity exchange markets for gold. As trust is pivotal for the gold market, the creation of an Emirati trust standard will prove crucial for the industry’s future. 

As part of that, an Emirati international gold standard will be an integral part of the policy as the United Arab Emirates hopes to market the country’s gold industry on a global scale. Gold and diamond trading has been historically vital in Dubai with more than 800 players in the industry concentrated around the Deira gold souk. 

In today’s economy, gold prices have been increasing as investors have been looking for safe-haven assets in the face of global economic uncertainty, with prices reaching a six-year high in August 2019. For those involved in the commercial gold trade, the five per cent VAT does not apply for gold, while it does still apply to gold jewellery. 


Are you interested in setting up a commodities trading centre in the heart of Dubai or the rest of the UAE? Our team at Europe Emirates Group can walk you through the opportunities that the gold and jewellery trade in the region can bring you. Get in touch with our experts to learn more about the process. 

 

Written by

Adrian Oton

CEO, Europe Emirates Group

 

Economics
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