Work will soon start to create a UAE Code of Conduct for the selling and trading of gold for investment purposes. While the Code will apply to any investments offered on gold by online trading platforms, it will also extend to retailers, according to a top official with the World Gold Council.

“That’s because many gold and jewellery retailers in the UAE now offer savings programs via monthly investment schemes,” said Andrew Naylor, Head of Middle East and Public Policy at London-headquartered WGC, which will be working with other stakeholders to put together the code of conduct.

“Because these gold savings schemes do not immediately see the actual transaction in the asset, investors would feel better off if they are assured of the safety of their funds. This is where the code helps.

“It’s clearly not just meant for online trading platforms licensed to operate in the UAE and offering bullion investments.”

On Wednesday (October 30) morning, gold set another all-time high of $2,787 an ounce.

Think of it as something similar to the ‘916 hallmark’ schemes that come with every gold purchase done locally. And the timing would be perfect as UAE residents mix buying physical gold with investments where they get ownership of a certain grammage of gold.

Similar Code of Conduct versions on gold investments are already in practice in India and Singapore, apart from other markets, helping create extra layers of transparency and security around the whole transaction.

The first meeting of key shareholders in the UAE gold trade will meet next month at the DMCC free zone in Dubai to start work on the Code. It would take a ‘minimum of six months to 12’ to fine-tune the various elements that will make up the Code.

With gold prices at record levels – in the last 24 hours, it took a few steps closer to $2,800 an ounce and is trading at $2,782 – more UAE investors are switching from buying gold outright and investing in ‘fractional’ or part ownership.

This is where online trading platforms have been particularly active, whereby investors get to put in amounts more suited to their budgets and for which they get ‘ownership’ of the corresponding grams of gold. These can be sold at any time they want to.

“Because these investments are not backed by physical delivery of gold to the investor, there could emerge doubts as to whether the trading platform or the retailer actually has the gold,” said Naylor.

“With the Code of Conduct, clear mechanisms will be in place to assure investors.”

UAE gold jewellery sales
In Q3-2024, UAE-wide gold jewellery sales recorded a 23% drop from a year ago as successive price spikes past $2,600 and $2,700 an ounce forced caution on shoppers, according to the latest World Gold Council report.

Joyalukkas offers a savings scheme allowing customers to save as little as Dh100 per month over 12 months, with a bonus of one month’s contribution. This scheme is ideal for individuals like me to budget for gold purchases with ease. Prima D'Souza
Dubai resident.

But many shoppers have during the last two years been participating in gold-saving offers directly from retailers. They make monthly payments and at the end of 12 months can pick up the gram of gold or jewellery they had invested in.

Since the actual handover of the bought gold takes place after a set period, the proposed UAE Code of Conduct on gold investments will apply.

“The UAE gold market has always been admired for its quality and purity of products and for the regular checks carried out to ensure everything is as promised,” said Naylor. “But similar frameworks are needed as new investment options get popular among UAE consumers looking at gold.”

Gold’s pull
The pull gold exerts on vast swathes of UAE consumers has been evident for some time. But if anyone needed further evidence, they would have got it yesterday (October 29), when the Indian festival of ‘Dhanteras’ was celebrated. Even with record gold prices, shoppers were busy adding to their gold kitty. And starting tomorrow, there will be the 48-hour Diwali rush.

We are seeing a steady number of Indian tourists shopping for gold and diamonds this Diwali, Chirag Vohra of Bafleh Jewellery.

"We are seeing a steady number of Indian tourists shopping for gold and diamonds this Diwali," said Chirag Vohra, Director of Bafleh Jewellery. "While there has been a slight adjustment in purchase sizes because of the high gold price, many shoppers are still investing in meaningful pieces. The cultural significance of gold and diamonds during Diwali remains strong."

Courtesy: Gulfnews