World Gold Council, DMCC tie-up brightens UAE’s status as key hub

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Dubai Multi Commodities Centre (DMCC) and the World Gold Council (WGC) have signed a strategic agreement aimed at advancing the UAE’s gold industry.

The partnership coincides with the official opening of WGC’s new office in Dubai, establishing its regional headquarters for the Middle East.

Located within DMCC, this expansion reflects WGC’s commitment to solidifying its presence in Dubai, which has emerged as a leading global trading centre for gold.

Ahmed Bin Sulayem, executive chairman and CEO of DMCC, emphasised the significance of the partnership: “This alliance adds to DMCC’s commitment to building a robust and sustainable gold industry. Together with WGC, we will set new standards of excellence and enhance accessibility and trust for global market participants.”

David Tait, CEO of WGC, echoed the sentiment of collaboration: “Our joint programme with DMCC complements our Gold247 initiative, fostering integrity and trust in the global gold market. We look forward to building a more accessible and trusted market for participants across the region and beyond.”

Partnership to drive…

…a comprehensive work programme focusing on several key initiatives, including:

• Combating illicit trade: The partnership aims to address the challenge of hand-carried gold used in illicit activities, promoting responsible sourcing practices aligned with the UAE government’s frameworks.
• Upskilling the industry: Through annual training programmes, the collaboration aims to equip industry professionals with the necessary knowledge and skills.
• Engaging key players: The programme involves collaboration with bullion banks, fostering dialogue and cooperation within the industry.
• Establishing retail investment principles: The partnership seeks to develop best practices for retail gold investment, promoting safe and transparent participation for consumers.
• Market research: Joint research initiatives will be undertaken to understand consumer behaviour and trends within the gold market.

Gold: The ups and downs

In other news, WGC’s Gold Demand Trends report revealed mixed news for the precious metal in 2023. While annual gold demand (excluding over-the-counter, or OTC, markets) fell slightly to 4,448 tonnes, compared to a robust 2022, it remained near record highs. This dip of only 5 per cent reflects the continued appeal of gold as an investment.

Interestingly, when factoring in OTC demand and other sources, total demand reached a new annual record of 4,899 tonnes in 2023. This strong demand, which came from less transparent sources, played a role in pushing the annual average gold price to its highest point ever.

Despite record-high prices, the global jewellery market displayed resilience in 2023, with demand rising slightly by 3 tonnes year-on-year. This resilience can be attributed, in part, to China’s strong rebound (17 per cent increase) from Covid-19 lockdowns, which offset a decrease in demand from India (9 per cent).

Louise Street, senior markets analyst at the World Gold Council, commented: “Unwavering demand from central banks has been supportive of gold demand again this year and helped offset weakness in other areas of the market, keeping 2023 demand well above the ten-year moving average.”

“In addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand and in 2024 we expect this to have a pronounced impact on the market. Ongoing conflicts, trade tensions and over 60 elections taking place around the world are likely to encourage investors to turn to gold for its proven track record as a safe haven asset.”

Compared to 2022, the UAE saw a significant decline in annual jewellery consumption, dropping by 15 per cent. According to the WGC, total consumption between January and December 2023 reached 39.7 tonnes, down from 46.9 tonnes in the previous year.

These contrasting trends highlight the complexities of the global gold market. While overall demand remains strong, fuelled by factors like record prices and safe-haven appeal, specific regional markets can experience variations in performance.

However, the latest reports show that gold prices continued their upward trend at the opening of the markets in Dubai on Tuesday, March 5, as the global spot rate surpassed $2,100 an ounce late on Monday.

Watch this space for more updates.