GOLD INDUSTRY IN UAE

Presentations………..• About Gold• Determination of Gold prices• International Gold market• UAE/Dubai as a Gold market• Gold selling in Dubai/UAE• Future of Gold in Dubai

About Gold

• Historically considered a symbol of beauty and wealth– Crowns, coins, jewelry, wedding rings and

other ornaments made of gold• Most malleable and ductile of all metals

– 1 gm of gold can be beaten into a sheet of 1 meter sq.

• Rare metal, with only about 160,000 tons of Gold mined till date

• Although no longer in use, Gold Standard has been the predominant monetary standard of all major countries until WW II

Determination of Gold prices

• While Gold is traded throughout the world,gold price is always in US dollars

• Gold price is free-float i.e. demand-supply considerations decide the price

• Gold Fixing is a procedure of setting the Gold price on the London market by the five members of the London Gold Pool. This is done twice everyday and is used as a benchmark for pricing all Gold products and derivatives throughout the world

International Gold market

The price of gold jewelery is determined by its weight and also by the making charges unlike in the west where it is per piece

Over the years, Gold has lost much of its importance as a financial and monetary instrument and is now traded like any other commodity

On an average, central banks still hold ~10% of their reserves in Gold. USA holds ~75% and EU ~50%

International Gold market

Holding Gold is different from holding currencies since the price of Gold is decided by demand-supply and not the monitory/fiscal policies of a government. Gold, unlike a currency, does not have the risk of a liability being repudiated

UAE/Dubai as a Gold market

Dubai is known as City of Gold.

90% of the market is plain Gold jewelry and the rest 10% is gem set

It is the fastest growing Gold center in the world

Reason for successful Gold industry in Dubai is free trade environment which makes it is the cheapest place in the world to buy Gold

UAE/Dubai as a Gold market

Gold Souq is the traditional shopping area for gold in Dubai. It is one of the largest retail gold markets in the world

New gold shopping centers include Gold and Diamond Park, New Gold Souq Center, Gold Land, Gold Center, Gold House

Dubai imports 300 tonnes of Gold for retail and wholesale

UAE/Dubai as a Gold market

Imports come from Saudi Arabia, India, Pakistan, Thailand, Italy, Malaysia, Singapore, Bahrain

Exports, imports and re-exports of gold and diamond jewellery through UAE account for about 20% of global jewelery trade.

The Dubai Multi Commodity Center (DMCC) has established a free zone that made Dubai a hub of gold and other precious metals manufacturing and trading

Dubai as a Gold market

DMCC provides a market and physical infrastructure that support all market participants in the value chain. Trade advice and input is provided by organizations like Dubai Gold advisory group , Gold and Jewelry group and World Gold Council

The critical success factors for gold and jewelry market in Dubai have been international standards, transparency, readily available statistics, fair and simple rules, low cost, low tax, and competitive freight rates

Dubai Gold and Jewellery Group was established in 1996.It has 560 members and represents all sectors of the trade including bullion trade, manufacturing, wholesale and retail

Gold selling in UAE

• The demand for gold in the UAE market is seasonal.

• Middle East is a huge market for gold. 21 carat is the traditional cartage in the gulf region

• Gold comes in cartage of 18, 21, 22 and 24

Gold selling in UAE

• Below 18 carat is not legally considered as gold

• UAE shoppers buy an average of 30 gm of gold annually compared to global average of less than 1 gm

• In UAE 48% of all gold is for gifting and 28% for self and

more than 2/3 of the population buys gold at least once a year

Future of Gold in Dubai

• International refiners are keen to set up refineries in Dubai

• A number of Gold and jewelery firms are setting up their marketing headquarters in Dubai

• Dubai Multi Commodities Centre (DMCC) has planned a number of initiatives to strengthen Dubai’s position as a leader in international Gold trade