Dubai has been known as the Middle East’s center for gold-trade, expanding over the years from its traditional souks to the Dubai Gold & Commodities Exchange.
Next year, Dubai Gold & Commodities Exchange is planning to introduce a spot gold contract for the first time in the Middle East. The Exchange intends to help the emirate become a bigger international trading center for Gold.
DGCX is planning to continue to expand its trade after growing from $6 million in 2003 to $70 billion last year, according to data from the Dubai Multi Commodities Centre. Nearly a quarter of the world’s physical gold traded everyday passes through Dubai to facilitate trading of precious metal between producers in Africa and consumers in Asia and Europe.
“Physically, we are looking to provide traders with a spot market, where at the end of every day, people can either deliver gold from vaults in Dubai or take delivery of that gold,” Chief Executive Gary Anderson said in an interview. “It will complement the gold market in the region itself and also the global market, making it easier to trade gold.”
The traditional market place where gold trading activities take place, which Arabs refer to as “Souks”, boosted gold retailers by 300. Market analysts estimate that approximately 10 metric tons of gold is traded in Dubai’s souk at any given time. Mr. Anderson confirmed that the exchange is consulting with bullion banks to design a spot gold contract that will go well with the industry.
Residents from the United Arab Emirates are able to trade spot contracts but the DGCX gold simplifies matters according to Mr. Anderson.
Refineries in the Middle East are boosting their capacities to provide further support from trades expanding.