UAE to become one of world's biggest gold trade hubs after surpassing UK

The report also predicted the rise of an 'Asian century' for gold, with a focus on the development of a new economic corridor among BRICS nations

Web Desk

Published: Mon 18 Nov 2024, 12:08 PM

Last updated: Mon 18 Nov 2024, 3:38 PM

The UAE is becoming one of the most important hubs for gold trade in the coming years, a recent report by the DMCC revealed.

This position was significantly bolstered by the UAE leapfrogging the United Kingdom in 2023 to become the second-largest gold trade hub worldwide, with over USD 129 billion in total trade – a rise of 36 per cent on the past year.

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The report titled 'Trade, Technology and Markets in Transition', further predicted the rise of an 'Asian century' for gold, with a particular focus on the development of a new gold economic corridor among BRICS nations, including the UAE, that can provide an alternative to traditional gold trade centres.

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The report provides key insights into the current state of the global gold and silver markets, while highlighting that geopolitical challenges in the world. These include sanctions against Russia which have shaken the global financial economy, prompting countries worldwide to reconsider their reliance on the US dollar and the safety of their gold holdings.

Due to this, central banks worldwide have ramped up their gold purchasing activities and repatriated US-stored bullion to diversify away from the dollar, with some even using gold in lieu of the US dollar in trade transactions. This shift is driving gold prices to unprecedented levels, creating a ripple effect across the global economy.

The UAE is responding to these challenges by emerging as a key player in the global precious metals market, leveraging its strategic location, robust regulatory framework, and advanced infrastructure to bridge East and West and reshape the gold trade.

The report also explores the growing importance of technological innovation within the precious metals market. From AI-driven exploration and autonomous mining techniques to blockchain-based tracking systems and digital gold investment products, technology is playing a crucial role in reshaping how gold is sourced, traded and invested in.

Recommendations for governments, businesses

The report further outlines a number of important recommendations for governments and businesses to help drive the evolution of the industry and shape the next phase of its growth:

Enhance transparency and regulation: Governments, exchanges and refineries should strengthen gold provenance measures and ensure more transparency, with the UAE’s model of transferring oversight to government bodies serving as an example for stricter regulation and accountability.
Facilitate trade liberalisation: Lower tariffs and remove customs barriers to combat smuggling, enhance liquidity and improve price discovery. Expanding trade agreements, like the UAE-India CEPA, and pursuing bilateral agreements will ensure smoother, more transparent trade.
Support formalising ASGM: Rather than banning ASGM gold, targeted finance, training and access to formal markets should be provided to improve safety, environmental standards and economic development while curbing smuggling.
Invest in AI and technology: Miners should invest in AI and advanced technologies to reduce costs, improve production and enhance ESG standards. Leveraging technology can also help artisanal miners eliminate mercury use.
Boost digital innovation and access for emerging markets: Investment companies and fintechs should develop digital products that enable small-scale and young investors in emerging markets to access gold trading, expanding market participation.
Establish global standards for digital and blockchain solutions: Industry participants should collaborate to create global standards for digital gold products and blockchain systems to improve transparency, eliminate pricing inconsistencies and reduce reliance on derivative products.

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