The volume of gold trade of the largest bullion dealer in Dubai increased 20 per cent in the first quarter of 2010, as compared to the same period the last year, Tarek El Mdaka, Managing Director of Dubai-based Kaloti Jewellery Group told Emirates Business.
He said the company has seen a constant increase in demand for gold from jewellers, bullion banks and from dealers trading on commodity exchanges across the world.
To meet this increase in demand, the company is enhancing the refining capacity of its Sharjah-based refinery from one tonne a day to 1.5 tonnes a day, El Mdaka said. The company imports gold ore from mines in Africa and South America and refines it in the UAE. It sells processed gold in the form of bullion bars. Gold sold by Kaloti Jewellery has a 'Dubai Good Delivery' certification.
El Mdaka declined to disclose the exact volume of gold the company traded in Q1 2010. Its communiqué said the company's annual turnover of gold is more than 400 tonnes.
The 23-year old company is headquartered in Dubai with offices in Hong Kong and Istanbul. It supplies gold to jewellers, bullion banks and to physically back gold futures contracts on the commodity exchanges. "Dubai has followed the international trend in gold sales. Demand has increased in every segment," he said.
The net long positions at Comex have increased six-fold since 2006 from about 50,000 contracts in October 2006 to about 275,000 contracts in October 2009. The amount of gold under gold Exchange Traded Funds (ETFs) has increased from 500 tonnes at the end of 2006 to 2250 tonnes at the end of 2009. Several Sovereign Wealth Funds (SWFs) have been investing in ETFs, El Mdaka said. "We can safely say that the investments from Dubai into gold have increased in similar proportion.
About 60 to 70 per cent of gold traded by Kaloti Jewellery International DMCC is for exports and India accounts for about 25 per cent of this volume. "We have long understood that Dubai serves as a gateway to the large gold markets in India."
The coming into existence of Dubai Gold and Commodities Exchange (DGCX) has helped gold suppliers like Kaloti to grow, he said. "The exchange has been a shot in the arm for us. We understand that some of the prominent deliveries being made to our clients head for delivery for the physically-backed gold futures contracts at the DGCX. We receive a lot of such orders." Dubai's gold trade was worth $29 billion in 2009.
By Shankar Shakshena
© Emirates Business 24/7 2010
