Dubai Gold Market Surges: Solidifying its Position as a Key Global Asset

Dubai Gold Market Surges: Solidifying its Position as a Key Global Asset

While North American investment demand remains a dominant force in the gold market, the precious metal is steadily solidifying its position as a vital global monetary asset and risk hedge.

The Dubai Gold & Commodities Exchange (DGCX), the Middle East’s largest digital marketplace, reported Wednesday that its traded contracts had surpassed 1 million contracts as of the end of June, with average daily trading volumes up 30% year-on-year.

The exchange said that trading value of its spot gold contracts had soared nearly 200% compared to the end of the first half of 2024.

The exchange also noted that its best-performing product so far this year is its Shariah-compliant gold spot contract (DGSG). Trading value for that contract had increased to $46.8 million in the first half of this year, compared to $15.6 million in the first six months of 2024.

“DGCX has had strong momentum in the first half of this year, trading nearly $47 million through our spot gold contracts alone, up 200% year-on-year, and with average daily trading volumes across the exchange up 30%, driven by demand for DGSG and Indian Rupee Quanto Futures,” said Ahmed Bin Sulayem, Chairman and CEO of DGCX, in a statement.

“This performance not only puts DGCX firmly on track to surpass its 2024 performance, but also cements its role as a key pillar of the region’s financial infrastructure,” he added. “As global market conditions become increasingly complex, the exchange is gaining increased acceptance among Islamic investors, bullion traders and institutional participants, highlighting the growing demand and broad appeal of precise, secure and transparent hedging tools – a position we expect to be further strengthened as we continue to solidify Dubai’s position as a world-class commodities and derivatives trading hub.”

The UAE continues to consolidate its position as an important commercial center for the global gold market. In a report released last year, the Dubai Multi Commodities Centre (DMCC) announced significant growth in gold trading.

DMCC said that $129 billion worth of gold flowed through Dubai in 2024, a 36% increase compared to the previous year.

In recent years, gold trading in the Middle East has become increasingly active as Asian investors demonstrate an insatiable demand for gold. Though higher prices have caused investors to pare back recent activity, analysts anticipate strong interest will persist into 2025. In particular, analysts noted that investors have limited options for protecting their capital, and gold remains the most reliable asset worth holding.

Analyzing the Growth in Dubai's Gold Market

The robust growth in Dubai's gold market can be attributed to several factors:

• Increased Demand for Shariah-Compliant Gold: Many Islamic investors prefer to invest in Shariah-compliant assets, increasing demand for products like DGSG.
• Dubai's Position as a Global Trading Hub: Dubai benefits from a well-developed infrastructure and a supportive regulatory environment, making it an attractive destination for gold trading.
• Hedging Against Risk: Gold is considered a safe haven in times of economic and political uncertainty, increasing its demand as a hedging tool.

The growth of DGSG products reflect the increasing sophistication and diversification of financial instruments available to investors seeking ethical and compliant investment opportunities.