Dubai: The base price of gold in Dubai, and updated daily, will now be on full outdoor display at key commercial locations in the city. It is part of an ongoing effort by local authorities and the gold trade to ensure “full transparency” in the way price information is made available to a wider audience.
Currently, there is a requirement that individual jewellery outlets should prominently display prices for 24-, 22- and 18-karat gold, and market feedback is that most comply with this.
“But there was a further initiative from the Consumer Protection Division at Dubai’s Department of Economic Development that such displays should not just be limited to within the shops and that it should be matched with prominent outdoor locations as well,” said Abdul Salam K. P., a senior member of the Dubai Gold and Jewellery Group. “The plan is to have around 15 display banners in areas such as Bur Dubai, Karama, Satwa, the Gold Souq and elsewhere.
“We are awaiting the Dubai RTA’s (Road Transport Authority) go-ahead for some of the locations, where the banners can also feature advertisements.”
The prices displayed will include a 3-3.5 per cent margin on average over the global price, to factor in the premium for bullion delivery and customs duty. It, however, will not cover the making charges (on average, these tend to be Dh12 a gram or more) that individual retailers will put up for their jewellery pieces.
“There’s no way that the Dubai gold rate can reflect the international price; other factors have to be counted in before they actually reach a retailer’s store,” said Salam. “From the Dubai Gold & Jewellery Group’s perspective, we have pushed for uniformity in pricing from members. Of course, they can opt out from the uniform pricing if they are not members.” The Group currently has 180 members.
Recently, a Dubai government department had touched base with the Group on the way daily prices were set in Dubai and the margins that were integrated into them. It followed speculation in the marketplace that the margin during a key promotional day (coinciding with the “Akshaya Trithiya” festival and is a key buying phase for Indian gold consumers) last month was “hiked arbitrarily”.
“The consistent message that Dubai government entities have been pressing for is transparency and ensuring that the emirate’s status as the “City of Gold” is retained,” said Salam.
Meanwhile, market sources point out that a “direct” reflection of the international gold rate in the ‘Dubai Board Rate’ on an intra-day basis would be quite difficult. “The Dubai rate is set at 9am just ahead of the trade opening here, but the key global trading centres of London and New York open at 1/1.30pm and 4.30pm respectively our time,” said a retailer. “These days, changes in the global gold prices average in the $5-10 range and it would not be possible for all local gold retailers to follow such changes by the minute.
“That’s why the Dubai Board Rate has to have that cushion integrated into it to cover for any sharp fluctuations that happen in intra-day trading globally.”
According to Cyriac Varghese, general manager of Sky Jewellery, “Margins in the Dubai gold trade are among the tightest in the industry and that’s one reason why the city has been one of the global hubs. The pricing in Dubai and the way it’s set is as transparent as can be.”
