The UAE Government is set to enforce new standards to ensure greater transparency in how the sector operates.
There will be a special committee to oversee the industry's activities, while a database will be prepared listing all the players directly - or even indirectly – involved in the handling of gold.
More important, there will also be the introduction of a 'UAE Good Delivery Standard', which will have a significant bearing on local gold refiners and the wider trade in the metal. The Standard, according to industry sources, will clearly define how bullion should be sourced and used by local refiners and anyone involved in the business. The UAE has multiple refineries, mostly operated by private entities. Much of what they bring out ends up as exports.
Once put into practice, this will immediately raise the level of transparency across the gold trade, including refining. This is on par with just about all the updated international standards in place for the gold business.
What Is The 'UAE Good Delivery Standard'?
- * It will be regarded as the "benchmark for quality and technical specification for the production of gold" in the UAE. It is to have a set of rules describing the physical characteristics of gold used in settlement within the wholesale trade.
- * The Standard will also provide standards for creditworthiness, operational competency and appropriate production procedures, ensuring the manufacturing of high-quality gold.
It was just over a year ago that the gold trade in the UAE was elevated to the status of a high priority industry, and the federal government announced that it will be working to raise the profile of the country as one of the global hubs for gold/jewellery. The reasons are amply clear – gold represents nearly 30 per cent of the country's non-oil exports.
Dubai with its status as the 'City of Gold' remains the focal point of the region's gold trade. But change has been coming to the industry, and with it, the need for optimum transparency in the sourcing, usage and distribution of gold.
Such transparency will also help UAE/Dubai to compete with other regional centres that aspire for a piece of the action. With the UAE Good Delivery Standard, the country will raise its benchmarks.
The move will definitely help Dubai and UAE to reinforce their strengths as a global hub for gold and jewellery. It will bring about greater transparency in the business and thus attract more and more organized players into the market.
The global diamond trade already operates under stringent rules regarding sourcing, with the "Kimberley Process" preventing any precious stones coming from conflict-ridden countries or zones to be traded.
The gold market too has its own checks and balances, whereby everyone involved in these transactions can trace all aspects of its origin. The global bullion market is moving towards greater transparency, led by government initiatives and industry groupings such as the LBMA. Across every industry, the ESG (environmental, social and governance) movement is becoming influential.