UAE will be Asia's gold hub in BRICS' new economic corridor: Bin Sulayem
UAE has already gone past London as world's second biggest gold trade centre
Dubai: The UAE is best placed to serve as the global hub for gold trade as a new economic corridor opens up between members of the BRICS grouping.
This would make the UAE an ‘alternative’ to traditional gold trade centres, according to a new report by the DMCC.
The UAE is already the second biggest gold hub in the world, having gone past the UK in 2023. Switzerland remains at the top of this particular ranking.
The UAE formally joined the BRICS bloc earlier this year. The group features Brazil, Russia, India, China and South Africa.
“We have witnessed historic shifts in the precious metals market, driven by Western sanctions that have forced record buying of gold by central banks and a rethink by many countries when it comes to their reliance on the US dollar,” said Ahmed Bin Sulayem, Executive Chairman and CEO of DMCC.
“We are seeing a new gold corridor form across Asia, with Dubai at its centre – exemplified by the UAE’s rise to become the world’s second-largest gold trading hub last year.”
A lot of factors are in play here that could elevate Dubai and the UAE's status as a trade conduit. It would also mean less reliance on the US dollar to settle trades between countries, and the expansion of BRICS - Saudi Arabia too is a new addition - could be just the gear shifter for that.
A reset in global gold trades
The UAE’s gold trade is valued at over $129 billion. The impression in trading circles is that BRICS will recast established norms in trade ties and in the movement of goods between member countries.
With the presence of China and India – the biggest and second biggest consumers of gold – in BRICS, there will be changes to how the metal is traded and moved around in the future.
UAE-India CEPA deal
Apart from BRICS, the UAE also has a CEPA deal with India, which too has meant a sizeable increase in offtake of bullion from here at a 5% import duty to India. India's import duty for the metal from other markets is 6% now, after it was cut from 15% earlier this year.
India can import up to 160 tonnes of gold from the UAE during the current 2024-25 financial year.
'Safety' of gold holdings
In its report, DMCC notes the 'geopolitical challenges' - including sanctions against Russia - that have 'shaken the global financial economy'.
It has led to countries 'reconsider' their reliance on the US dollar and the safety of their gold holdings.
"As a result, central banks have ramped up their gold purchasing activities and repatriated US-stored bullion to diversify away from the dollar, with some even using gold in lieu of the US dollar in trade transactions," The DMCC report notes. "This shift is driving gold prices to unprecedented levels, creating a ripple effect across the global economy."