-- Posted Monday, 11 February 2013 | | Disqus

The Dubai Gold and Commodities Exchange will launch its first-ever spot gold contract later this year allowing UAE traders to buy and sell physical gold on a local exchange for the first time. Gold traders based in the City of Gold are ecstatic about this news reported in The National today.

It’s perhaps surprising that this has taken so long. Presently the DGCX only offers contracts based on the future price of gold, not the current or spot price.

Positive reaction

Traders are delighted by the news and they think it will do a lot to boost liquidity in the Dubai gold market by eliminating the need for offshore credit and collateral to trade in gold. The focus for Dubai is always on the physical trade in gold and the new spot gold contract hits that mark. Exchange traded gold products have not been as successful in Dubai as elsewhere in the world.

However, the DGCX still has a lot of work to do before the contract can be launched. Officials said the contract would need the support of local and international banks and the gold refiners.

‘We are still very much a cash settlement exchange, and in terms of the deliverability of the gold, we want to have the right infrastructure in place to enable us to do that,’ CEO Garry Anderson told The National.

Hot gold market

One can only speculate on how the gold market will look by the time the DGCX gets its spot trading up and running. A huge increase in demand for the yellow metal from China this year and continued global central bank money printing augurs well for gold prices.

It would be better if the DGCX could rap up its procedures in a few months in true Dubai style rather than drag this out for the rest of the year. Do such exchanges not work in real time?

If there is a demand in the marketplace for a spot gold trading contract then why not make it happen now and not wait while other exchanges abroad snap up this business?

-- Posted Monday, 11 February 2013 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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