Shoppers in UAE spend 30 times more on gold than elsewhere

Hong Kong, October 16: Dubai is the nerve centre of gold trade in the world, and as such, Dubai must have the functional ability to play a major role in hedging gold prices, said Arshad Khan, Director, Dubai Gold and Commodities Exchange (DGCX), the world's newest online commodities derivatives exchange.

Addressing a gathering of industry experts and representatives on "Trends in Trading in Gold Futures and its Implications on Gold Prices" at the Gold & Precious Metals Investment World 2006 conference held in Hong Kong, Khan said one in every eight tons of mined gold found its way into the gold souks of Dubai. "Gold consumption in UAE has risen by $110 million or 18% to touch $650 million in the second quarter of 2006. On an average, shoppers in UAE spend 30 times more on gold than shoppers in the rest of world," Khan pointed out.

Describing Dubai Shopping Festival as one of the biggest shopping extravaganzas in the world, Khan said around $3 million worth of gold and diamonds would be given away in prizes in the festival. The sheer volume of trade in gold here and the extraordinary vibrancy of the market make the role of gold futures crucial for Dubai. "Futures markets are an excellent hedging platform for physical markets. The arbitrage opportunities between exchanges as well as between spot and futures are invaluable when we look at them from a global trade perspective. It is important to note that Dubai lies between the time zones of the economic capitals of the world, between the Far East and the West. This strategic location as a global trading hub provides Dubai immense opportunities," he explained.

The time factor plays out much to Dubai's advantage. Thanks to its location, online trading hours of DGCX not only overlap with markets in the Far East, Europe, and the US, but also get extended and connect between the trading hours in the Far East and the West, Khan noted, adding that since trading access to DGCX is available from anywhere in the globe, DGCX is a vital presence on an international scale.

While emphasising the decisive positioning of Dubai as a nerve centre of Gold trade, both spot and futures, Khan also spoke at length about the distinctive features of gold as a stand-alone phenomenon in the economic history of the world. "No other metal in history has been as coveted as gold. It has seen through wars, famines, floods, and financial upheavals, but has come out unscathed and the faith of people in it remains intact to this day," he recalled. Interest in the Gold Exchange Traded Funds is continuously increasing as we see around 510 tonnes of the yellow metal valuing around US 10 Billion dollars is currently under management by these funds.

As the demand for gold far outstrips supply, the precious metal continues to rise in importance. Total demand for gold exceeded physical supply by over 15% from 2001 -2005, Khan revealed. On top of all, gold is a perfect hedge to inflation, and hence central banks have stated intention to increase gold holdings, adding further value to the yellow metal, he concluded.   

-Ends-

Notes for the Editor
About DGCX:
The Dubai Gold and Commodities Exchange (DGCX) is a fully automated, online commodities exchange. Strategically located in Dubai, the exchange is the first international commodities derivatives marketplace in the time zone between Europe and the Far East.

DGCX is a joint venture between the Dubai Multi Commodities Centre, (DMCC), Financial Technologies (India) Limited (FTIL) and Multi Commodity Exchange of India Ltd. (MCX). At present DGCX offers its members and their clients to trade in Gold, Silver and Currency futures. This will be followed by options on gold and silver futures. A diversified range of commodities such as steel, marine fuel oil, freight rates and cotton will be introduced for trading as the exchange progresses further.

For further information please contact:
Dubai Gold & Commodities Exchange
Neena Birla
AGM- Marketing
Tel: +971 (4) 361 1616
Mobile 050 3400946
E-mail: neena.birla@dgcx.ae

Promoseven Weber Shandwick PR
Farah Farooq
Group Account Director
Tel: +971 4 3210077
Mobile: 050 5379753
E-mail: farah.farooq@promoseven.com

© Press Release 2006