Dubai becomes 'El Dorado' of the Middle East with gold boom
For more than a century, merchants have traveled to Dubai's souks in search of spices, pearls and gold. With such intense trade, Dubai became known as the city of gold.
In the first nine months of 2020, the country's gold trade was valued at €41 billion, according to Dubai Customs. It is the city's most lucrative export after oil.
Dubai has taken advantage of its geographical position by creating gold vaults, jewelry manufacturing facilities and refineries.
At Al Etihad Gold they refine and convert gold into investment grade bullion. They supply banks and bullion dealers, but also jewelry wholesalers. The entire process is carried out at their facilities.
Al Etihad has the Dubai Good Delivery Accreditation, which is an international benchmark for quality and technical specifications.
Al Etihad Gold Refinery co-owner Salah Khalaf said he believes gold remains a popular purchase from a jewelry and investment point of view.
"I just encourage people to invest in gold, and I see it coming full circle here in this city, especially the infrastructure and stability and security."
The refinery manufactures gold bars of various sizes as the final product. Like any commodity, its price can change. But at current market prices, an ingot of 10 kg. It is worth a little less than four hundred and fifty-four thousand euros.
The finished bars are sold to bullion banks, dealers and wholesalers. One of the largest wholesalers in the city was created by the Abdullah family in 1955. In Jawhara they specialized in trading gold, jewelery and diamonds. They later expanded into retail.
Tawhid Abdulla, CEO of Jawhara and chairman of the Dubai Jewelry Group, said the city's industry is flourishing. "At any time. There are 40 to 50 tons available in the market, either retail or wholesale. And because of the large numbers that we invoice, our prices become the most competitive in the world."
The gold and jewelery industry is well regulated in the city, with more than 700 members forming part of the Dubai Gold and Jewelery Group, a not-for-profit trade body.
Tawhid Abdulla stated that their own and government compliances make them have a "perfect product".
It is estimated that between 20% and 40% of the world's gold stock passes through Dubai each year, with most of it reaching the gold souk. In it there are 300 stores in just half a square kilometer.
Another factor in Dubai's success is its geographical location. Gold brokers take advantage of the time zone, open from 6 a.m. to 11 p.m. locally, it is one of the few exchanges in the world that can capture all time zones from Australia to the west coast of the United States .
For Jeffrey Rhodes, founder of the consultancy Rhodes Precious Metals (RPMC), the heart of the gold industry in the United Arab Emirates will always be in the traditional Dubai gold souk, on the banks of the Creek.
Rhodes pointed out that there are several factors that explain the enduring success of the gold trade.
"It's the people, it's the infrastructure, it's the leaders that allow the business to flourish."
"Secondly, it is simply the most profitable place in the world to buy gold jewelry in the world. In others, the taxation is very high. It is the best place to buy. You get the most value for your money."
In terms of value, Dubai gold is duty-free for tourists. For this reason, many stock up in the Gold Souk or on the other side of the city, in the Parque del Oro y el Diamante.
Kiran Pithani created Cara jewelry with his brother in 2005. They have several shops and workshops, the most popular in the Parque del Oro y el Diamante.
His specialty is custom jewelry, with 85% working on custom designs, settings, and products.
Pithani states that "gold will always be popular. It is one of the metals associated with currency."
He added that people prefer to invest in gold especially in times of instability.
Like many sectors, the demand for jewelry evaporated. But in the fourth quarter of 2020, trading picked up and the city of gold is confident that this trend will continue.
