Dubai’s DGCX launches physical gold futures, spot gold contracts

Dubai Gold and Commodities Exchange (DGCX) has launched two new products: Physical Gold Futures and Spot Gold Contracts.

The products are designed to be used together by traders, similar to a repurchase agreement (repo), to get short-term liquidity from banks through the spot gold markets while opposite physical future trade is done at the same time for the trader to receive their gold back and the bank to get their funds.

Both the newly launched products can be traded on the DGCX EOS Trader platform, where traders manage risk, protect value and grow portfolios by buying and selling commodity and currency derivatives.

Gold that is delivered under the Spot Gold Contract shall be of a fineness of 995 parts per thousand and to the ‘UAE Good Delivery quality’ specification within the chain of custody, as determined by Dubai Multi Commodities Centre.

The DGCX clearing house acts as the central counterparty to all transactions.

Ahmed Bin Sulayem, CEO of DGCX, said: “Over the last year, gold has become a solid top tier asset class globally, as banks have increasingly started to accept it as collateral from traders and institutions looking for liquidity in the markets. The UAE is a regional financial hub and commodities trading, especially gold, is a crucial asset driving volumes in the markets. By launching new physical gold futures and spot gold contracts, we are offering greater choice to participants that operate in the commodities market. The move, which offers tremendous potential for traders, brokers, banks and financial institutions, reflects our commitment to continuously facilitate access to high-quality products and services for our members.”

DGCX also announced that the first transaction was successfully completed between DGCX member, Paloma Precious DMCC, and one of the most reputable banks in the UAE, as it became the first trader to benefit from access to short term liquidity using the newly launched products. The physical gold bars changing hands in this transaction are Emirates Gold, which are part of the ‘UAE Good Delivery’ standard.

Ahmed Bin Sulayem added: “We are delighted to have successfully closed the first transaction for the newly launched products. The transaction highlights the nature of products we are bringing to the markets – relevant, innovative and highly accessible to key market participants. We expect more such transactions with banks and financial institutions as we continue to bring products that can provide liquidity for traders to the markets.”

The introduction of the products follows the signing of a memorandum of understanding (MoU) and an agreement between DGCX and FinMet, a precious metals’ technology trading, training and logistics provider.

Read: Dubai Gold & Commodities Exchange, FinMet collaborate to expand DGCX gold product offering

DGCX and FinMet will work together to educate the market and identify more trading opportunities in the gold markets, onboarding banks and new members that are seeking diversity in products for their business needs.