Dubai: The growing gold consumption in China and India is creating more business opportunities in the Middle East, according to industry experts.
With the demand rising, refineries in the Middle East, including Dubai, are expanding their capacity and new ones are being established, according to Pradeep Unni, head of research, strategy and trading at Richcomm Global Services. The gold is refined in Dubai and then exported to India and to China through Hong Kong, he added.
China currently holds 4,000-5,000 tonnes of gold at least, Unni said. Last year, China overtook India as the biggest consumer of physical gold.
“China has been trying to accumulate a lot of gold reserves in the last five to six years,” he said.
Also, gold jewellers in India are opening stores in Dubai. Unni points out that in India, buyers have to pay a ten per cent duty on top of the international market price, unlike in the UAE.
Unni expects that by 2020, when Dubai is expected to attract 20 million visitors per year, the emirate will become a benchmark for gold trade. Gold traded through the emirate reached $75 billion last year, representing 40 per cent of the world’s physical gold trade.
The Australia and New Zealand Banking Group (ANZ)expected that China’s gold imports reached 1,050 tonnes last year, representing an increase of 80 per cent compared to the previous year. Annual demand is expected to increase to 1,176 tonnes, according to the China Gold Association.
Demand may decline 17 per cent this quarter compared to last year after a rise in the purchasing of jewellery and bars in 2013, according to the association.
Buyers of bullion last year, during which gold prices saw the biggest drop in more than three decades, may be deterred by the rebound in prices this year.
Meanwhile, Chinese consumers are not only buying gold domestically but buying from Hong Kong and then taking their purchases back to China, says Vincent Chow of Chow Sang Sang in Hong Kong. He added that there is strong demand for 24 karat gold from Chinese buyers.
- with input from agencies
