The Gold Rate in Dubai, UAE is often a cause for debate. The most common questions are:
Who sets the Gold Rate in the UAE?
Why is the Dubai Gold Rate different to the LBMA London Fix?
Dubai is known as the City of Gold and is a major retail and wholesale hub for precious metals markets dealing in bullion and in jewellery. The retail market is particularly strong with hundreds of dealers and merchants, operating most notably in the specialist Gold Souk.
The Government of Dubai’s Department of Economic Development has been tasked with bringing harmony to an otherwise frantic market sector and succeeds in this task by setting an ‘official’ gold rate as a basis for transactions in the Dubai gold market.
This arrangement promotes transparency in one of Dubai’s most prominent trade sectors by displaying the Dubai Gold Rate on outdoor screens in major gold trading locations.
The retail price of a piece of jewellery is set by adding the Dubai Gold Rate specific to the weight of the item, to a manufacturing charge for the piece. The gold rate is set but the manufacturing charge is negotiable, allowing for competition between dealers.
Additional measures taken by the Dubai Central Laboratory include tests on precious metals and gems for purity and authenticity. Regular and also unscheduled checks on the accuracy of weighing scales are also part of the drive to promote trust and transparency in this key sector.
The Gold Rate in Dubai is generally slightly higher than the well known LBMA (London Bullion Market Association) Fix. The LBMA gold Fix is produced twice each day that the London Bullion Market trades and is used globally as a benchmark price for large gold trades.
There are several reasons why the Dubai Gold Rate is often higher than the London Fix:
The conclusion therefore is that the Gold Rate in the UAE is set by the Government of Dubai with regard to market conditions and a strategy to promote transparency and trust in the precious metals sector. The Dubai Gold Rate can differ from the LBMA Fix but this is because the two pricing systems work in very different markets and time zones.