Discover the History of Gold Trading in Dubai

Introduction

Dubai is now one of the largest and most important gold trading hubs in the world. In this guide, we’ll explore the meteoric rise of gold trading in the UAE and discuss the significance of Dubai as a major player in the global gold trade.

The history of gold trading in Dubai

The Dubai gold market has grown exponentially. A thriving trade centre for decades, Dubai has only emerged as a global gold trading powerhouse relatively recently. The story of Dubai’s gold industry begins with traditional trading practices involving small-scale businesses, which bought and sold gold and gold jewellery at the city’s famous souks.

Dubai Gold Souk opened in the early 1900s but at that time, there was just a small cluster of jewellers. The market took off during the 1970s as a result of booming oil sales. Dubai attracted attention from overseas buyers and investors and the growing tourism industry meant that visitor numbers swelled. As gold became increasingly sought-after in Dubai, the Gold Souk expanded. Today, it is a bustling spot where tons of gold are traded daily.

The rapid growth of the Dubai Gold Souk is not the only contributing factor to Dubai’s prominence on the global gold trading scene. The establishment of the DMCC (Dubai Multi Commodities Centre) has played an integral role in the history of the gold trade. The UAE’s largest free-trade zone, the DMCC covers four key investments: precious metals and gems, energy, agricultural commodities and metals.

Key players in the gold industry

The most influential players in the gold industry in Dubai include:

• Government bodies
• Gold refineries
• International banks
• Vendors, including online providers such as iGold

Which factors have contributed to the growth of Dubai’s gold industry?

There are three key factors that have contributed to the exponential growth of Dubai’s gold industry, including:

1. Government support: government support in the form of policies and measures designed to boost growth and position Dubai as a primary trade hub has helped to increase sales, support vendors and make Dubai an attractive proposition for investors looking to benefit from tax advantages.
2. Infrastructure development: Dubai is famed for its meandering markets and labyrinth-like souks but there has been a major development in its infrastructure. The souks have expanded, they are easily accessible and they sit alongside ultra-modern malls, luxury hotels and thriving business developments that facilitate quick, easy trading. The introduction of online trading via platforms like the DGCX (Dubai Gold and Commodities Exchange) has also boosted the industry.
3. Location: Dubai enjoys an enviable location. It is easily accessible from all corners of the globe and is one of the busiest transport hubs in the world.

The future of gold trading in Dubai

Up to 40% of global gold supplies pass through Dubai (source). Despite the ongoing growth of the Middle East gold market, there are challenges. As we look to the future, gold prices have decreased since 2022, many vendors, particularly smaller businesses, are struggling in the wake of the pandemic and competition is increasingly fierce. Traditional businesses face the threat of being swallowed by chains and bigger corporations and prices are fluctuating amid global uncertainty and wider political and economic factors. The future is bright for Dubai’s gold industry, but there will be obstacles for traders and peaks and troughs to navigate and negotiate.

Summary

Dubai’s gold industry has enjoyed a period of prolific growth. Dubai is now one of the most high-profile hubs for gold trading, attracting buyers and sellers from around the world. From bustling souks to a global powerhouse, Dubai’s future looks bright, even though traders and businesses face challenges in the months and years ahead.

By iGold. Published on 3rd March 2023.