(MENAFN- Khaleej Times) The UAE will grow as a precious-metals trading hub as more overseas companies turn to the country because of its location near consuming nations, according to the Dubai Multi Commodities Centre.
Dubai accounts for about 25 per cent of global physical gold trade, Gautam Sashittal, chief operating officer of government-owned DMCC, said in an interview at the London Bullion Market Associations annual conference in Rome. Gold trade in the country totalled $45 billion in the first half of this year, compared with $70 billion in all of 2012, he said.
The DMCC is the UAEs largest free zone offering more than 7,300 companies, a number of them in the precious metals industry, tax-free status, Sashittal said. While gold is heading for the first annual decline in 13 years as some investors lost faith in the metal as a store of value, the plunge to a 34-month low in June boosted purchases of jewellery, bars and coins in Asia. India and China are the biggest gold consumers. "So long as we provide world class infrastructure, products, services and appropriate regulation, the trade can only grow," Sashittal said. "Dubai is a natural location. Its ideally located between resource producing countries and consuming countries."
Gold for immediate delivery traded at $1,292.98 an ounce by 11:30am in London, set for a 23 per cent drop this year. Prices that rebounded from $1,180.50 in June compare with a record $1,921.15 in September 2011.
The slump boosted global bar and coin sales 78 per cent to a high in the second quarter, the London-based World Gold Council estimates. Appetite for those items contrasts with sales of gold from exchange-traded product holdings, which fell 702.7 metric tonnes, or 27 per cent, this year.
The Dubai Good Delivery standard was developed by the DMCC in 2005 and there are 16 DGD refineries across 10 countries. They signed up in June 2012 to the DMCCs responsible sourcing guidelines, based on Organization for Economic Cooperation and Development guidelines.
All the refineries should comply with the guidelines, or other accepted responsible-sourcing audits, Sashitall said. One of the three DGD refiners in the UAE passed the audit and the other two should complete the process in the coming weeks, he said.
"The DGD standard and DMCCs responsible sourcing protocol and process are robust and internationally accepted," Sashittal said. "Once refineries have passed the audit process, global acceptability of that gold becomes easier. That in turn allows the Dubai market, and participants trading via Dubai, to grow."
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