Gold & Silver
Will Dubai Become the New "City of Gold"?
By Resource Investor
Nov 24, 2005, 10:31

Will Dubai Become the New "City of Gold"?

By Jon A. Nones
23 Nov 2005 at 01:12 PM EST

St. LOUIS (ResourceInvestor.com) -- The much anticipated Dubai Gold and Commodities Exchange (DGCX) has officially launched becoming the world's newest commodities exchange and the first such marketplace in the Middle East.

Ross Normal of TheBullionDesk.com previously said that Dubai hopes to become the “epicenter of global gold trade.” Resource Investor asked Founder and chairman of GoldMoney.com James Turk, who lived in the United Arab Emirates for several years, for his comments.

“I see it as a very positive development for gold,” Turk said.

Yesterday, General Sheikh Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and UAE Defence Minister, pressed the trading button thus commencing trading on the DGCX at 10 a.m. on 22 November, 2005.

Turk said the DGCX gives Middle Eastern investors the opportunity to trade in a local market, which adds more participation and more liquidity to the global gold market - both of which are always very good things to achieve.

Second, this new exchange gives North Americans the opportunity to trade in an established market with pre-defined trading contracts (size, time for delivery, etc.) in another time zone, which is also an important development, he said.

The Exchange will offer an uninterrupted trading window of 13 hours and fill the time gap between Far East and Europe, according to the press release.

“With all of the money now flowing to the Middle East because of the rise in energy prices, the new Dubai exchange is well placed,” Turk said.

DGCX began trading with a 1 kilogram gold futures contract. However, silver futures and gold and silver options will be available during first quarter of 2006, followed by a diversified range of commodities such as steel, freight rates and cotton. Fuel oil futures contract will kick off in the second half of next year.

“Gold is becoming an increasingly important asset to people in the Gulf, just like it is becoming increasingly important elsewhere in the world because of rising problems with the world's national currencies, particularly inflation,” said Turk.

The launch of the commodities exchange will be one more very good reason for international players to come and set-up shop in Dubai, according to the release.

On 15 October, Ross Norman of TheBullionDesk.com said Dubai could become “epicenter of global gold trade.”

“It may seem a little premature to suggest that Dubai might, in short order, become the epicentre of global gold trade – particularly as its exchange, the Dubai Gold and Commodities Exchange (DGCX), has not yet been fully built,” he said.

In a late October press release, Dubai Metals and Commodities Exchange’s gold executive director Colin Griffith said strong demand would boost Dubai’s gold imports to 525-540 tonnes by the end of 2005 despite the recent jump in prices. Imports were 503.5 tonnes in 2004 while exports stood at 260.909 tonnes.

He also said jewellery sales were expected to rise to 110-115 tonnes this year from 100 tonnes a year ago.

“The Dubai exchange is an important development for the gold market in my view, and I expect this exchange will within five years have a standing comparable to other major gold exchanges like the Comex,” Turk concluded.


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