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Home » News » UAE Becomes the World’s Second-Largest Gold Hub Amid Rising Asian Demand

UAE Becomes the World’s Second-Largest Gold Hub Amid Rising Asian Demand

by | Nov 19, 2024

UAE

The United Arab Emirates (UAE) has overtaken London to secure its position as the world’s second-largest gold trading hub, driven by surging demand from Asia, according to a report by the Dubai Multi Commodities Centre (DMCC). The report highlights that Asian markets have reshaped the global gold industry this year, pushing prices to unprecedented highs before a slight pullback.

Dubai and the UAE are strategically positioned as a vital link between Eastern and Western markets. The DMCC predicts an “Asian Century” for gold, envisioning an economic corridor among BRICS nations—Brazil, Russia, India, China, and South Africa—where the UAE plays a pivotal role.

Ahmed Bin Sulayem, Executive Chairman and CEO of the DMCC, explained:
“In recent years, we’ve observed a major transformation in the gold market. Western sanctions have fueled record gold purchases by central banks, leading many nations to reconsider their reliance on the US dollar. This has given rise to a new gold corridor across Asia, with Dubai at its core.”

The UAE’s gold trade has witnessed remarkable growth in 2024, with $129 billion worth of gold flowing through Dubai—a 36% increase compared to the previous year. This surge has positioned the UAE as the second-largest global gold trading hub, surpassing London.

The DMCC’s report attributes this shift to geopolitical tensions and sanctions, particularly against Russia, which have disrupted traditional financial systems. Many countries are now diversifying their reserves by increasing gold purchases and repatriating bullion stored in the US. In some cases, gold is even being used as a substitute for the US dollar in international trade.

As central banks continue to bolster their gold reserves, prices have surged, creating ripples across the global economy. The DMCC report underscores the need for key reforms to ensure sustainable growth in the gold market.

Recommendations for the Future of Gold Trading

To maintain this momentum, the DMCC suggests several initiatives:

Enhancing Transparency and Regulation: Improving oversight in gold trading can ensure market stability and trust.

Promoting Digital Innovation: Fintech companies are encouraged to develop digital tools, making gold trading accessible to small-scale and younger investors in emerging markets.

Digitizing the Gold Market: The industry should work towards global standards for digital gold products and blockchain systems. These measures could increase transparency, reduce pricing inconsistencies, and minimize reliance on derivatives.

As Dubai cements its role in the evolving gold market, the UAE’s rise underscores the shifting dynamics of global trade, with Asia at the forefront of this transformation.

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